Consumers Broaden Their View of Uses for Life Insurance

18% use life insurance to protect their pets
A couple and their dog

Parents with young children and family breadwinners aren’t the only ones who need life insurance, a new survey suggests.

Financial services company AIG Life Insurance surveyed 2,201 adults to gauge their understanding of life insurance and get their thoughts on who they think needs it. The survey found that consumers with varying lifestyles are finding a place for life insurance in their lives.

More than just parents can benefit from a policy

Life insurance is one way that parents of dependent children can protect their families from financial disaster if they were to unexpectedly die. A life insurance policy could ensure that children have money for living expenses and possibly even education costs after a parent’s death.

However, many survey respondents found other uses for life insurance as well. A majority of respondents — 78% — said singles without children can benefit from life insurance. Additionally, 88% of respondents said parents may need life insurance even after their children turn 18 and are legally considered adults.

Some respondents even see the value of using life insurance to ensure that their pets are taken care of in the event they should die. In fact, 18% of respondents reported leaving provisions for a pet through life insurance — a slightly higher percentage than those leaving provisions to grandchildren, parents, siblings or friends, the survey found.

Life insurance not only for the breadwinner

Though life insurance is typically used to replace the income of someone who has died, most of those surveyed — 80% — also agreed that the primary earner in the household should not be the only person with a life insurance policy. Additionally, 90% of respondents believe that stay-at-home parents can also benefit from having a policy even though they don’t get a salary, as a parent’s ability to stay home with children does have financial implications. If a stay-at-home parent were to die, that household might need to factor in extra money for the cost of child care.

Not only is buying a life insurance policy viewed by some as a sound financial strategy, but many respondents consider it an expression of love. In fact, more than half of respondents — 52% — said they would feel abandoned if their partner died without having taken out a life insurance policy.

However, couples seem to have similar approaches to life insurance. An overwhelming 83% of respondents who have a life insurance policy said their partner has a policy, too. On the flip side, 70% of those without life insurance said their partner does not have a policy either.

Your financial plan should not just take into consideration day-to-day costs and short-term goals, but also extend outward, long into the future. Just as a 401(k) plan is designed to help you fund your retirement, a life insurance policy may be one way to ensure that other long-term goals are met. You may also find that your life insurance needs change over time, so it’s a good idea to regularly review your options to make sure you have enough coverage as you approach different life milestones.

Tamara E. Holmes

Tamara E. Holmes is a Washington, DC-based writer who covers personal finance, entrepreneurship and careers.