If you're not married, you may wonder if it's necessary to have life insurance. After all, you may not have anyone else who relies on you financially. But when considering questions to ask yourself about coverage, there are several situations when getting a life insurance policy makes sense.
If you're single, find out when you should get life insurance and how to determine the best coverage level.
Federal and private student loans are typically discharged when the borrower passes away. The exception is if the borrower has a co-signer, such as a parent. In this case, your student loan balance will become their responsibility, even if the understanding was for you to make payments entirely on your own.
One reason to get life insurance for yourself is to cover your outstanding balance should you pass away before you've paid the loans. Then you'd avoid unexpectedly placing the financial burden of your student loans on someone else.
When you buy a house with a home loan, ownership can transfer to your beneficiary when you pass away. It may seem like an asset, but in reality, you're also transferring your debt. They'll need to assume your payments quickly; otherwise, the lender can start the foreclosure process.
But what if your beneficiary (whether a sibling, parent, or friend) can't afford that mortgage payment? They can make plans to sell the home, but it takes time to list a property for sale. Providing a life insurance policy helps relieve them of that responsibility, especially when they're going through an emotionally turbulent time.
If you take out a business loan, you may be required to get a life insurance policy with the lender as the beneficiary. That way, if you pass away with an outstanding balance, the lender doesn't get stuck with the bill. It may also make sense to get a personal life insurance policy if you're in business with a partner.
Even if you don't have business debt, one of you passing away could cause major setbacks to the business. After all, that's one less person contributing to the business's success. Naming your partner as a life insurance beneficiary gives the business a better chance of survival under such extenuating circumstances.
If you're a single parent or you have other financial dependents — like elderly parents or a sibling — then life insurance should be a priority. It can be a smart move even if they don't live with you but rely on you for some support. Whether you provide financial support, like paying for their housing or groceries, or support them with your time as a caregiver, your death would create a significant gap in their quality of life. Getting life insurance would leave them money to continue getting the help you provide.
As you consider whether you need life insurance, consider how you'll pay for your final expenses, such as a funeral service and cremation or gravesite. You may not need life insurance if you have enough cash savings to cover those costs. But average end-of-life expenses cost thousands of dollars. Even a small life insurance policy ensures you have the money to cover your final wishes.
A life insurance policy can also serve as an inheritance. You could leave the money to a family member or a charitable organization. A term life insurance policy is an affordable way to do this; plus, the money isn't subject to estate tax or added to your beneficiary's income. If you want to leave behind a legacy for the people and causes you love, then it's the right time to buy life insurance.
Wondering how much life insurance you need? The answer depends on your specific situation. If your goal is to cover any outstanding debt that may be passed to someone else, your current balance is a good starting point. When you want to continue financial support for a business or a loved one, consider a multiple of your income that could cover them for a set time.
Being single doesn't mean no one relies on you. Consider the full scope of how you can impact the lives of others, whether it's with money, time, or your business expertise. From there, you can get a sense of what size policy makes sense, given your specific needs.
Ready to get started? Find out how Ethos life insurance works.