Buying Life Insurance When Single

Life insurance, often associated with married individuals or those with dependents, can also offer substantial benefits to single people. Although single people might not feel the immediate need for a policy, there are several compelling reasons to consider buying life insurance when single. This decision depends on factors such as plans for a family, existing financial obligations and the desire to leave a financial legacy. Understanding these aspects can guide single consumers in making an informed decision about life insurance.

There's an assumption that life insurance is only for people who have dependents. However, there are many reasons why single people might consider purchasing a life insurance policy. Below are some primary motivations for getting life insurance for a single person with no dependents.

1. Income Protection for Dependents: Being single doesn't necessarily mean you have no financial dependents. You may have elderly parents, siblings or even pets relying on your income. A life insurance policy can still cover those who indirectly depend on you.
2. Anticipation of Future Dependents: Even if you're single now, you might be planning to start a family in the future. By purchasing life insurance early, you can secure a lower premium and ensure that future dependents have financial security.
3. Debt Coverage: Life insurance for a single person can cover outstanding personal debts, like student loans, personal loans or a mortgage. This coverage can ensure that these debts won't fall onto the shoulders of surviving family members.
4. Funeral Expenses: Life insurance for singles can also cover the cost of funeral and burial expenses, helping ease the financial stress for loved ones during an already challenging time.
5. Legacy Planning: Life insurance allows single individuals to leave a financial legacy to a chosen beneficiary, be it a charity, a beloved niece or nephew or another loved one.
6. Business Obligations: If you're running a business, single-person life insurance could cover business-related debts, protect the business's continuation or facilitate a business succession plan.
7. Tax Benefits: Some life insurance policies provide tax advantages, like tax-free death benefits and tax-deferred growth on cash value.
8. Future Insurability: Purchasing life insurance when young and healthy secures your future insurability, irrespective of potential health changes later in life.
9. Estate Liquidity: For single individuals with significant assets, life insurance can provide the liquidity needed to pay estate taxes and prevent the forced sale of assets.

Consider how these reasons may apply to you and your future financial goals to make a more informed decision about purchasing life insurance when single.

Buying life insurance when you're young and single isn't just about protecting potential future dependents. It's also about taking proactive steps to secure your financial future, protect against the unexpected and lay the groundwork for sound financial planning.

There are two primary types of life insurance: term and permanent. We highlight the major differences between these policies below:

• Term Life Insurance: This insurance offers coverage for a set period, generally 10–30 years. It's straightforward, cheaper and often deemed the best life insurance for singles. If the policyholder dies within this term, the insurer pays a death benefit to the beneficiaries. If the policyholder outlives the term, the coverage ceases without a payout. Its affordability and simplicity make term life a popular choice for single individuals. Term insurance is appropriate for someone who values affordability and may not require lifetime coverage.

• Permanent Life Insurance: This policy type covers the policyholder's entire life span. It has a cash value component that can grow or earn interest over time. However, these policies are more complex and expensive compared to term policies. An example of a permanent life insurance policy is whole life insurance.

Understanding the fundamental differences between [whole life and term life insurance] can help you choose the life insurance coverage that best fits your lifestyle and financial goals.

The average cost of a 10-year term life insurance policy with $250,000 in coverage for a healthy, 40-year-old individual is $18 per month. Meanwhile, a 20-year term life insurance policy with the same coverage costs $26 monthly.

Policy costs can vary significantly based on age, lifestyle and overall health. The coverage amount you choose and the type of life insurance can also affect your premium rates.

The table below gives an overview of the average monthly costs of term life insurance for various ages and coverage amounts.

Life insurance remains important for single seniors, offering financial assurance during retirement. It can serve several valuable functions:

• Estate Planning: Life insurance can help older adults manage their estate by providing funds to cover taxes or other expenses, thus avoiding the rushed sale of assets.
• Funeral Expenses: Life insurance can ease the financial load on surviving family or friends by covering funeral and burial costs.
• Leaving a Legacy: Seniors can use life insurance to leave a financial legacy to loved ones or cherished charities.
• Financial Gift: Life insurance can be a significant financial gift for grandchildren or other family members.

Some policies specifically serve single seniors in these ways. Guaranteed acceptance life insurance assures coverage regardless of health status or age, making it attractive for older individuals. However, these policies often have a waiting period before full death benefits are payable.

Another approach single seniors can consider is a final expense insurance policy, which specifically covers end-of-life expenses, including funeral and burial costs. These policies are easier to qualify for, and premiums usually don't increase with age, providing older adults peace of mind that their end-of-life expenses won't burden their loved ones.

For more information, see our guide to the best life insurance for seniors.

Determining the need for life insurance as a single person relies on personal circumstances, needs and goals. We highlight the significant considerations for single people below:

You should consider buying life insurance as a single person if:

• You have dependents like aging parents or a non-working sibling. Life insurance for a single person can ensure they are taken care of financially.

• You hold significant debts, such as mortgages or private student loans. Life insurance for a single person can help manage these obligations in the event of your unexpected passing.

• You're planning for future dependents and want to lock in lower rates. Purchasing life insurance early can secure more favorable terms.

• You're a business owner with financial responsibilities tied to your business. Life insurance can protect your business interests and support any partners or stakeholders.

You may not have an immediate need to buy life insurance if:

• You have no dependents and minimal financial obligations. In such cases, the immediate benefits of life insurance for a single person with no dependents may be limited.

• Your assets are sufficient to cover any outstanding debts and funeral expenses. If your financial situation ensures all liabilities are covered, life insurance might not be necessary.

• You have adequate savings or investments to provide for any dependents in the future. If your financial planning already covers potential future needs, additional life insurance coverage may not be essential.

Remember that buying life insurance as a single person is a strategic decision that involves weighing your current and future financial needs.

Life insurance offers many benefits but may not be necessary for everyone. Below are answers to some common questions about purchasing life insurance as a single individual to help you make an informed decision.