It’s a commonly accepted belief that families and older individuals need life insurance. Generally speaking, both groups have individuals to care for who would be at great disadvantage upon their passing.
Popular sentiment is more torn on life insurance for young or single individuals. In some instances, younger people are told that they don’t need to buy life insurance. Here are some things to keep in mind if you’re young or single and don’t believe you need life insurance.
You Never Know What Will Happen
We all believe we’re invincible to some extent. We think we’ll have time to deal with things later and that the worst will never happen to us. Unfortunately, we’re not invincible, and death is something that comes for us all. Morbidity aside, we never know when that might happen to us. Not planning now puts us and our loved ones at risk.
This is especially the case in the event of an untimely death. Life insurance helps mitigate financial risks to those around you upon your passing. Take funeral costs, for example. Growing numbers of individuals are taking to crowdfunding funeral expenses for family members who’ve passed without adequate life insurance coverage. Asking a family member to go to that extent to pay your final expenses simply adds undue burden to an already traumatic time.
The Younger You Are, The Cheaper it is
You may not think you need to buy life insurance when you’re young or single, but that overlooks one key benefit – low cost. According to Pam Jenkins, assistant vice president for product and market development at Colonial Life, “It is never really too early to purchase life insurance… locking in rates at a younger age will result in a lower rate.” However, a large number of individuals don’t buy life insurance because they believe it’s too expensive – as a 2013 LIMRA study reports 86 percent of individuals believe life insurance is too expensive.
Putting off the purchase decision on life insurance only makes life insurance more expensive than the perceived myth– for a variety of reasons. “Coverage may not be available or may be more expensive once you are diagnosed with certain illnesses or experience certain health events,” says Jenkins in explaining the risks of delaying buying life insurance. In short, buying earlier allows you to lock in the cheapest rates possible.
In many instances, you can secure coverage through group term life insurance through your employer. Sometimes, employers pay for this coverage and in this case, the coverage may not be portable, meaning you’d lose the coverage if you changed employers. However, if you purchase additional permanent insurance, you can take that insurance with you. Permanent insurance, in particular provides protection beyond your working years, as long as you maintain premium payments to keep the policy in force.
Married vs. Single
It’s easy to think that if you’re single, life insurance coverage is not necessary. As pointed out previously, even in the event of not having dependents, your loved ones will still have to deal with the costs of final expenses and a funeral. If you have debt, your family may or may not be responsible for paying it off. Life insurance will help protect the family members you leave behind to avoid undue financial burden and grieve in peace.
Buying life insurance when you’re young and with a family becomes even more important as your dependents rely on you to provide for them. Life insurance offers protection for those dependents in the event of your untimely passing. Jenkins points out some of the numerous things life insurance proceeds can help provide:
- Paying off a mortgage
- Providing college funds
- Covering final expenses
- Delivering survivor benefits
Regardless of your family situation, a serious look at life insurance reveals many meaningful benefits.
How to Balance Competing Obligations
Perhaps the biggest hurdle to young or single individuals buying life insurance is competing obligations. We have over $1.3 trillion in student debt, with the class of 2016 graduating with an average of over $37,000 in student loans. Combine that with a need to save for the future and it can make life insurance an afterthought.
If faced with this situation, it’s important to look at your budget and get quotes for coverage. In many situations, you’ll find coverage is affordable and will require little sacrifice. While your student loans may not default to your parents in the event of your untimely passing, depending on the types of loans you have, coverage will help your surviving family members pay for the costs of your final expenses.
Buying life insurance when you’re young may not feel pressing but in many cases, it’s the best time to get coverage. Ultimately, proper life insurance coverage is a part of a well-rounded financial lifestyle.