Do You Need Life Insurance?

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Even though we're inundated with advertisements telling us we need life insurance, you'll be happy to know that not everyone needs it. As a basic rule of thumb, you DO need life insurance if anyone will be financially impacted by your death. If you don't fall into that category though, it probably makes little sense for you to be investing your money into life insurance policies when it could be better served elsewhere. With that in mind, let's take a look at the categories of people who both need and don't need life insurance:

People Who May Need Life Insurance

Single parents

If you're a single parent you have at least one child who is heavily dependent on your time and resources to care for them while they're young. You wear many hats as a single parent:

  • You cook meals and help feed your children
  • You bring in money and pay for all of life's expenses
  • You drive around town taking them to school, practice, meet-ups with friends
  • You provide endless other services that require your time, attention, and resources on a daily basis

If you were to die unexpectedly, this could put many people (your children and future caregivers) in a financially painful position. Most people in this situation want to know that their children will still be able to live a prosperous and full life even if they aren't around. Taking out a life insurance policy will ensure that this is possible.

Married couples (with or without children)

Married couples are typically dependent (in different ways) on one another. Whether you require the income or the homemaking services of your spouse, you rely on them in some financial or non-financial capacity. If they die, you will more than likely need to replace their time or money.

Anybody with dependents

We've already discussed making sure your children are taken care of if you pass away unexpectedly, but dependents aren't always kids. Ill-prepared parents can also be reliant on your money to assist in paying for their retirement years. Paying for elder care (nursing homes, assisted living facilities, in-home care, etc) can exact an enormous financial toll, and if you're not there to help pay for it, life insurance can assure that they're taken care of.

People Who May Not Need Life Insurance

Single people

The majority of single people have nobody depending on their future earning ability (at least not yet). Because of this, life insurance is not necessary unless you're purchasing a policy in anticipation of upcoming event in your life, ie: a wedding or the birth of a child. 

Anybody without dependents

Assuming you have no dependents (children, spouses or parents) who are relying on you, you don't NEED life insurance. Your premature death more than likely won't cause any undue financial stress on others.

Wealthy individuals

If you've stocked away enough money to pay for loved ones who still need financial support, you may not need life insurance. Assuming your assets (ideally, liquid assets) are enough to cover everything from funeral costs to estate taxes to your loved ones' future cost of living, you can consider passing on the purchase of a life insurance policy.

Still Not Sure?

Because certain types of life insurance, such as term insurance, are very affordable, we always think you should apply the 'better safe than sorry' adage. Monthly premiums can vary widely but as a benchmark, a healthy 30 year-old male can purchase a 20-year term life policy with $200,000 in coverage for $28 per month from MetLife. As always we suggest you shop around and get quotes from a handful of insurance providers so you can compare prices across companies and make a well-informed decision.

 

 

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