We tend to associate life insurance with families. Google the term and you'll find a bunch of stock family photos and metaphorical images of paper dolls holding hands. The connection makes sense: Life insurance, fundamentally, protects the people who depend on you, should you die. But here's the thing: Sometimes, a lone wolf needs life insurance, too. Here are five times a single person should look into a policy.
1. You've got co-signed debts.
OK, so maybe no one depends on your income. You'll still want to provide some cover to anyone who shares your debts. So, say Mom co-signed a private student loan to help you pay for grad school. Or your credit was in rough shape, so Dad used his good score to help you get an auto loan. You're covering those bills now, but, should something happen to you, the balance will fall to them. A term life insurance policy ensures they won't pay (literally) for that favor.
Genius tip: Your relatives or loved ones won't be responsible for any debt you have they didn't sign for. Those balances will simply fall to your estate. You can go here to learn more about what happens to your debt after you die. But as a quick takeaway, if you're not sharing any debts and none of the other items on this list apply to you, life insurance might not make sense. Our free Insurance Checkup tool can help you figure out if and/or how much coverage you need.
2. You don't plan on staying a lone wolf forever.
We get it. You can't predict the future — and there's no guarantee you'll meet your soulmate and ride a dragon off into the sunset. But here's something you can bet on: the longer you wait to get life insurance, the more it will cost you. In fact, life insurance premiums increase by an average of 8% to 10% each year, simply as a result of getting older. And you'll face an even higher price if you develop a health issue along the way. So, if a family is something you want for yourself, it's a good idea to get a policy now.
3. You foresee care-giving in the flames.
Dependents aren't solely spouses and kids. If you have reason to believe you'll be taking care of your parents financially in their old age, then, yes, you should look into a life insurance policy to provide that support, too, should something happen to you during or before then.
4. You're worried about funeral expenses.
We hate to break it to you, but all men must die — and funerals are expensive. According to the National Funeral Directors Association, the median cost of a funeral in the U.S. in 2014 was $7,181. If you can't cover that expense with what's in your bank account, a term life insurance policy or, if you're older and/or unwell, final expense life insurance policy, can preclude someone else from having to take care of the bill.
5. You're a consummate philanthropist.
Maybe you've dedicated your life to the black. Maybe you're older, without an heir, and an ample fortune you're set to leave behind. Maybe philanthropy is simply important to you. Life insurance is one tool to give back. For instance, term life insurance allows you to name a charity as your beneficiary, while whole life insurance provides an host of tax benefits someone looking to donate their estate could find useful. You can read about these options and when they might be worthwhile here.
We get it. Life insurance is super-confusing. To help you sort out your options, we've got the answers to 20 questions about it you were too embarrassed to ask right here.