Do I Need Life Insurance? The Ultimate Guide to Help You Decide

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Buying life insurance might be one of those things you just never got around to doing. You had many other things going on in your life, such as raising kids and preparing for retirement. Now, you may wonder, “Do I need life insurance?” 

It’s a good question because not everyone needs a policy. But you don’t want to leave your loved ones in the lurch. That’s why it’s essential to know if you need life insurance if you’re single or married or if you’re in your 20s, 30s, 40s and beyond.

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Do I Need Life Insurance?

With so much information out there about life insurance, it’s no wonder people are confused. You need life insurance if someone relies on your income or you provide valuable services for the family. But many exceptions to the rule exist, and there are reasons not to buy life insurance.

Do I Need Life Insurance If I’m Single?

Answer: It depends.

Life insurance covers the financial needs of those left behind after death. While it may not seem like an urgent need for a single person, there are still good reasons to get coverage:

  • Your parents or another loved one paid for your college education. Federal student loans are discharged upon death, but Parent Plus Loans and private student loans may not be.
  • You have co-signed debts. The co-signer on a car loan or credit card is stuck with the bill after you pass away, and a life insurance policy can cover the balance.
  • You have dependents (parents, children) that rely on you financially. Life insurance can help pay for health care, daily living expenses and other costs.
  • You want to cover end-of-life expenses. Life insurance can cover the expense rather than burden your loved ones with funeral and burial costs.

Do I Need Life Insurance If I’m Married?

Answer: Most likely. 

According to the Bureau of Labor Statistics, more than half of U.S. households rely on the income of both spouses. Your spouse may struggle to pay the bills if you die prematurely. Life insurance for couples can provide financial security and peace of mind to protect against the unexpected.

Do I Need Life Insurance If I Have Children?

Answer: Yes.

Life insurance can be a crucial financial decision if you have children. As a parent, you want to protect your family’s financial security after you’re gone. Life insurance can cover daily living expenses, college tuition and other costs until your children reach adulthood.

Do I Need Life Insurance If I’m a Stay-At-Home-Parent?

Answer: Yes.

Of all the reasons to skip buying a life insurance policy, not having an income isn’t one of them. You may not bring home a paycheck, but you provide substantial support for your family. Think about how much it would cost to hire someone to:

  • Care for children
  • Make meals
  • Run errands 
  • Manage other household tasks

When you add it up, you can easily see the value you provide and why stay-at-home parents need life insurance.

Do I Need Life Insurance If I’m Divorced?

Answer: It depends.

If you’re divorced and have children, you have good reason to get life insurance: to protect your children financially if the unthinkable happens. You might also consider getting life insurance on your ex, and ensure the benefit is sufficient to replace child support or alimony until the last child has reached adulthood.

Do I Need Life Insurance If My Unmarried Partner and I Live Together?

Answer: Most likely.

You can take advantage of life insurance protection even if you and your partner aren’t legally married. Buy a big enough policy to support your loved one after you’re gone, and name your significant other as the beneficiary.

Do I Need Life Insurance By a Certain Age?

It’s tough to know when to buy life insurance. If you don’t buy it when you’re young, you may worry that no one will want to insure you if you develop health complications later in life. But sometimes, it makes sense to wait to buy. 

Do I Need Life Insurance In My 20s?

Answer: Probably not, but could save you money.

Lower rates because you’re young and healthy make life insurance an attractive option. Getting a policy might make sense if you have student loans, cosigned debts or children. But if you’re single with no dependents? You can usually skip coverage in your 20s.

Do I Need Life Insurance In My 30s?

Answer: Most likely.

Life insurance in your 30s can be smart, especially if you have a family. It’s also a good idea if your income is higher because your loved ones may struggle to replace it if something were to happen to you.

Do I Need Life Insurance In My 40s?

Answer: Most likely.

If you made it to your 40s without life insurance, it’s not too late to buy a policy. The death benefit could go a long way to covering your funeral, burial or cremation costs, paying off debt (mortgage, loans) or leaving a financial cushion that your loved ones could rely on after you’re gone.

Do I Need Life Insurance In My 50s?

Answer: It depends.

Life insurance can cost more when you wait to buy it in your 50s. But that shouldn’t stop you if you need coverage. However, it may be an unnecessary expense if you don’t have financial dependents and have enough cash stashed away to cover debts or final expenses.

Do I Need Life Insurance In My 60s and Beyond?

Answer: Possibly not, but it’s worth double checking your situation..

Many people in their 60s, 70s and beyond don’t need life insurance. You may have paid off your mortgage and retired, and your children might be grown and out of the house. It still makes financial sense to have life insurance if:

  • You want to pre-plan your own end-of-life celebration/memorial.
  • You’re still working, and you (and your spouse) depend on the income.
  • You’re concerned that your estate won’t have enough assets to cover funeral and other “final” expenses.
  • You have an extraordinarily high net worth that could be subject to estate taxes.
  • You have others who depend on you financially.

What Happens If You Have No Life Insurance?

Anyone can die at any time, even young and healthy individuals. However, many people don’t think about the financial implications of death until it’s too late. While your demise isn’t a pleasant thing to dwell on, it can be foolish to die without the proper life insurance.

If you die without life insurance, your family could be stuck footing the bill for your funeral and burial costs. It isn’t chump change — the median cost of a funeral is nearly $8,000, according to the National Funeral Directors Association. 

However, term life insurance is an affordable option that can help care for your loved ones if you pass away prematurely. Final expense life insurance is an affordable option that can cover burial expenses no matter when you pass away.

Do I Need Life Insurance and Accidental Death Insurance ?

Life insurance and accidental death insurance) are two very different policies that serve different purposes. Life insurance pays a death benefit for almost any cause of death. Accidental death insurance, often called AD&D insurance, only pays if the death was an accident or if there’s an accidental injury, like the loss of a limb.

When choosing between the two, most people benefit more from getting life insurance coverage. A good term policy is cheaper than you might think, and it covers more causes of death than AD&D insurance. However, accidental death coverage is an affordable option for people who are unable to qualify for life insurance.

Do I Need Mortgage Life Insurance?

Mortgage life insurance is a type of term policy. But the death benefit doesn’t go to your loved ones — instead, the insurance company pays the bank or lender directly. That means the policy doesn’t pay unless you die while you still have a mortgage balance.

You must also consider why you’re thinking about life insurance in the first place. It’s not the mortgage itself that triggers the need. It’s the concern about your loved ones not becoming homeless. It’s a different mindset. After all, your family’s actual need for financial support may not relate directly to the outstanding principal on the mortgage.

That’s why homeowners are better off buying a life insurance policy. It gives your next of kin more options compared to mortgage life insurance. With an affordable term policy, they can use the money to pay off the house, but they can also choose to use it for other expenses. 

The Bottom Line

Most people should have life insurance, but they don’t take the time to figure out if they need it and how much they should carry. Luckily, we’ve done the hard work for you. 

Use The Ultimate Life Insurance Calculator to discover if you need a policy and how much coverage you should have. It takes less than 5 minutes, and we don’t ask for your email address or phone number to give you a quote.

Disclaimer: The comments, opinions, and analyses expressed at Everyday Life are for informational purposes only and should not be considered individual investment, legal or tax advice.

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