It's a common misconception that life insurance is only necessary for people who are married with kids.
“If you have dependents, the need is obvious,” says Matt Lyon, USAA advice manager. “But even if you're single, you still have financial responsibilities.”
USAA believes that every life — young or old, employed or not — has value and should be protected. Life insurance is a critical component of everyone's overall financial security.
Benefits of life insurance for a single person
People count on life insurance for several reasons, including covering final expenses, paying off outstanding debts like student and business loans and contributing to charitable organizations.
These are costs anybody could incur, whether they're married with children or on their own. In the event of your death, would these costs fall to family members? Not only does life insurance provide stability and peace of mind for you, but it also provides that peace of mind to your current and future loved ones.
With permanent life insurance, you also have the potential to build cash value. “This is a benefit that often appeals to single people because it can function as an asset later in life,” Lyon says.
When to consider life insurance if you're single
If you're considering life insurance but are struggling to see the value, start by asking yourself: “Am I 100% certain I'll remain healthy and also won't need life insurance later?” The answer to this question most likely is no.
“Maybe you're in great shape now, but events beyond your control over the coming years could make the cost of life insurance much higher,” Lyon says. “It's helpful to lock in a price while you are young and healthy, even if you don't have a family yet.”
Consider life insurance during these key life phases:
- You're starting a business.
- You have outstanding debt.
- You're buying a house and will have mortgage payments.
- You plan to have a family.
- You're embarking on a career in a risky occupation, such as a firefighter or police officer.
- You're interested in starting a dangerous hobby.
Secure the best rates by securing a life insurance policy at the youngest possible age. You can't predict your future health or the impact an unforeseen accident could have on your ability to get affordable life insurance.
What type of life insurance should single people have?
Life insurance companies offer various options, including term life insurance and permanent life insurance.
Term life insurance pays the benefits of the policy through a period of time or certain age that's specified when you buy the policy. The premiums you pay each month either stay level or increase yearly, depending on your policy.
On the other hand, permanent insurance, also known as whole life insurance, is meant to last a lifetime.
Universal life insurance, a type of permanent insurance, also gives the policyholder an opportunity to accumulate cash value while providing flexible premiums that can be appealing for those starting out.
How much life insurance should a single person have?
The amount of life insurance a single person needs depends on their age, health, debts and future financial goals.
There are rules of thumb to help determine how much life insurance is needed, but it's best to take advantage of available resources and professional advice to choose what makes sense for you.
Categories you'll want to consider include but are not limited to:
- Current and future liabilities.
- Income at risk.
- Final expenses.
- Education or other future family goals.
If you own a small business, a life insurance policy can pay off any business loans, protect your business partner and help keep your business afloat. Learn more about business life insurance.
It's worth noting that unlike federal student loans, private student loans aren't discharged in the event of death. If you have private student loans, your loved ones could inherit your debt.
Is life insurance worth it if you're single?
Not only is life insurance worth it, it's crucial. Whether or not you're married with children, a life insurance policy provides stability and peace of mind for you, your loved ones and your potential future family.
To determine the best options for your needs and financial goals, talk with a life insurance professional, or calculate how much coverage is best for your needs.
Learn more today about life insurance.
See what you need to help protect yourself and your family.