Do I Need Life Insurance if I’m Single?

Life Insurance

Many single people believe that they do not need life insurance, but this is not necessarily the case. After all, it is important to consider the financial burden that you will be placing upon your family if you fail to take proper precautions. There are some ways to take care of things without life insurance, but they are cost prohibitive to most people. As a result, it is most likely in your best interest to consider life insurance policies for your financial game plan. In order to do so, you must analyze your specific needs to ensure that you select an appropriate amount of coverage.

How Does Life Insurance Work?

There are three forms of life insurance that you will be able to choose between: term life, variable life and whole life. Term life insurance policies require the same payment amount for a specific number of years, and the payout at the end stays the same. A variable life policy will begin with small premiums that increase as you get older. The payout at the end will vary, and you might also have access to a cash build-up before your death.

On the other hand, a whole life insurance policy is designed to provide financial protection for you and your beneficiary. Each of your monthly payments are split between your policy and an investment that is tax-free. You will be able to take money out of your investment account, or you can leave it to increase the total amount that your beneficiary will receive.

Importance of Life Insurance: Preparing for Death

Do you need life insurance if you’re single? While the answer varies for everyone, the main reason that a single person purchases a life insurance policy is to provide coverage for their funeral expenses — expenses which can prove to be quite costly for families. According to the National Funeral Directors Association, the average cost of a funeral is $6,560, and you can expect this number to steadily increase throughout the rest of your life. In fact, the price of a funeral has more than tripled over the past 30 years, and has increased by almost $1,500 during the last decade alone. When you take these factors into consideration, you can see how important it is to not only hold life insurance, but to also take your life expectancy into account as well. For example, if you are a 50-year-old healthy American woman, your life expectancy is approximately 80 years, according to the Centers for Disease Control and Prevention. With the typical increase that has occurred since 1960, it is reasonable to assume that funeral prices 30 years from now will only get higher.

Alternatives to Life Insurance for Funeral Expenses

There are two other reliable methods that you can utilize to pay for your funeral, but the cost associated with one of them would be difficult for most people. It is possible to make prepaid funeral plans, but unless you have the extra funds available, this is not a very realistic option. Another option is to start a savings account that is earmarked for your own funeral expenses. The issue with this option, however, is that it is difficult to know how much you need to put aside on a monthly basis.

Selecting a Beneficiary

The decision of who will be your beneficiary is one that should be taken very seriously. After all, they are the person who will have the ultimate say over how they handle the money that they will receive after your death. Make sure that you pick someone who you completely trust to be able to deal with the logistics of planning a funeral. You should also leave detailed instructions for them in your will, if you have any specific requests. After all, unless you put something in writing, it is very possible that what you wanted in your waking life will not end up happening.

How Much Do Life Insurance Policies Cost?

Saving money and locking in lower rates may prove to be another incentive for young, healthy, single people to purchase life insurance. The price of life insurance varies depending on your age, gender and if you have any specific health conditions. A healthy 50-year-old man would typically spend about $1,000 a year to receive $500,000 in coverage, but if the same person had purchased an equal policy 10 years earlier, they could have saved as much as $650 annually. While it is important to buy life insurance or insurance for a home or recreational vehicle as early as possible, it is also never too late to purchase into life insurance policies.

This article was written by Chad Fisher, who has written extensively on insurance and financial issues and how they affect the average family.