Who needs life insurance and why?

Anyone who has shared debts or someone who relies on their income should consider getting life insurance coverage.

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Amanda Shih

Amanda Shih

Editor & Licensed Life Insurance Expert

Amanda Shih is a licensed life, disability, and health insurance expert and a former editor at Policygenius, where she covered life insurance and disability insurance. Her expertise has appeared in Slate, Lifehacker, Little Spoon, and J.D. Power.

&Rebecca Shoenthal

Rebecca Shoenthal

Editor & Licensed Life Insurance Expert

Rebecca Shoenthal is a licensed life, disability, and health insurance expert and a former editor at Policygenius. Her insights about life insurance and finance have appeared in The Wall Street Journal, Fox Business, The Balance, HerMoney, SBLI, and John Hancock.

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Maria Filindras

Maria Filindras

Financial Advisor

Maria Filindras is a financial advisor, a licensed Life & Health insurance agent in California, and a member of the Financial Review Council at Policygenius.

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There are many reasons you may need life insurance. If you’re unsure if you need it, the simplest question to ask yourself is: Does anyone in my life benefit from or need my financial support? This could be a child, spouse, aging parent, business partner, or even the co-signer on a student loan who would get stuck with the debt if you weren’t around to pay it off.

If you answered yes, you probably need life insurance.

Key takeaways

  • Life insurance gives your family financial protection when you’re gone.

  • Buying life insurance when you’re young saves you money on premiums in the long run.

  • Life insurance can cover the cost of your funeral, your family’s everyday expenses, and any debts you leave behind.

Do I need life insurance?

Should something happen to you, life insurance ensures your family is protected financially. Having a policy is important for anyone with dependents, and has become even more pivotal during the COVID-19 pandemic. According to a study conducted by LIMRA, 42% of American households would struggle financially if a wage earner died unexpectedly and 31% are more likely to buy life insurance due to COVID-19. [1]

Whether you need life insurance depends on your individual circumstances. Take a look at the table below to determine if you are someone who needs life insurance.

If you are a…

You may need life insurance because:

Parent

Life insurance helps with the everyday expenses of raising a child and saving for college tuition and other milestones.

Spouse

Life insurance guarantees you’re covered for any shared expenses or loans.

Student

Federal student loans are forgiven if the borrower dies but private student loans transfer to the co-signers. Life insurance protects your loved ones from that debt.

Entrepreneur

You can name a business partner as a life insurance

beneficiary

. Proceeds can be used to keep the business running or buy out the deceased's shares.

Caretaker

Whether you care for an adult child, an aging parent, or someone else, life insurance helps your loved ones find new aid if something happens to you.

How much life insurance should I get?

To calculate how much life insurance coverage you need, Policygenius’ experts recommend you multiply your income by 10 to 15 times as a starting point. However, your coverage should encompass all of your anticipated financial obligations, including debts, children, or aging parents.

Don't forget to include any riders that can customize your policy for your needs.

→ Learn more about calculating how much life insurance you need

Do I need life insurance if I don’t have any dependents?

You may not think it’s worth buying life insurance while you have no dependents. But getting life insurance when you’re young can save you money.

“If someone knows or expects they will have an insurable need soon, we recommend locking in coverage while you are younger and (usually) healthier,“ says Patrick Hanzel, certified financial planner and Advanced Planning Team Lead at Policygenius. “We recommend owning coverage as you would five years from today.“

Each year you delay buying a policy, the average cost of premiums rises by 4.5% to 9%. Take a look at the average term life insurance rates below to see how they increase by decade.

Age

Sex

$250,000

$500,000

$1,000,000

25

Female

$14.17

$21.06

$33.45

Male

$17.11

$26.89

$44.62

35

Female

$16.39

$25.43

$42.49

Male

$18.58

$30.14

$51.51

45

Female

$28.31

$47.71

$86.45

Male

$35.11

$60.58

$112.52

55

Female

$59.80

$108.44

$207.17

Male

$82.80

$150.39

$282.99

Methodology: Average monthly estimated rates for male and female non-smokers in a Preferred health classification with a 20-year term length. Rates are based on the monthly Policygenius Life Insurance Price Index. Prices in the index are determined by internal actuarial rate tables for life insurance carriers that offer policies through the Policygenius marketplace: AIG, Banner Life, Brighthouse, Lincoln Financial, Foresters Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, SBLI, Symetra, and Transamerica. Illustration valid as of 8/16/2022.

quote

We recommend owning coverage as you would five years from today.

- Patrick Hanzel, certified financial planner and Advanced Planning Team Lead

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If you are young and have no dependents, ask yourself:

  • Can your loved ones afford the cost of unexpected funeral or medical expenses if you die? The average funeral costs more than $7,000. Your beneficiaries can use your death benefit to cover those expenses. If you become sick or injured and need medical care, the benefit can go toward any costs that health insurance does not cover.

  • Did someone co-sign a loan for your home or car? Just like a student loan, they’ll be responsible for the remaining balance if you die. A life insurance death benefit can cover that outstanding debt for your co-signer as well.

  • Do you plan to have children in the near future? Many people wait until their children are born to purchase life insurance. But if you know you want kids down the line, you can lock in a cheaper premium by buying a life insurance policy now. 

Even if you won’t need the full coverage amount to cover final expenses and debt, the remaining balance could provide financial security to your loved ones or even be donated to a charity of your choosing.

Ready to shop for life insurance?

Start calculator

Still not sure if you need life insurance? Take a look at this flowchart to see where you fall.

Policygenius Do I Need Life Insurance Flowchart

Who doesn’t need life insurance?

Not everyone needs life insurance, even if they play an important role in their families’ lives. Here are a couple of examples of people who usually don’t need term insurance:

  • Retirees: Ideally, by the time you reach retirement age your children are financially independent and you’ve paid off your major debts. At this life stage, there’s no real need for life insurance.

  • Children: While many life insurance companies offer policies specifically designed to cover your kids, it’s not typically recommended because children don’t earn wages or support a family.

While life insurance isn’t typically necessary for retirees or children, some individual circumstances may suggest that life insurance would be beneficial. For example, if you have a large estate, you may want a policy to help decrease the burden of estate taxes

Bottom line: If you have outstanding debts, dependents, or aren’t nearing retirement age, it’s better to get life insurance sooner rather than later.

→ Learn how to find the best life insurance policy for you

Frequently asked questions

Is it important to have life insurance?

It's important to get life insurance as soon as you have — or are planning to have — dependents or shared debts. Without a policy, your loved ones can be without necessary financial support when you die.

Who doesn’t need life insurance?

You don’t need to buy life insurance for your children, since you don’t rely on them financially. If you’re retired with no debt and no dependents, you may also be able to forgo a policy.

How much life insurance do I need?

Your life insurance death benefit should be at least 10 to 15 times your income and should factor in financial obligations like childcare or college tuition, end-of-life expenses, and any debts you have.

References

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Policygenius uses external sources, including government data, industry studies, and reputable news organizations to supplement proprietary marketplace data and internal expertise. Learn more about how we use and vet external sources as part of our

editorial standards.
  1. LIMRA

    . "

    You Know You Need it. Let’s Talk About Life Insurance

    ." Accessed January 07, 2022.

Authors

Editor & Licensed Life Insurance Expert

Amanda Shih

Editor & Licensed Life Insurance Expert

gray twitter icon linkgray linkedin icon link

Amanda Shih is a licensed life, disability, and health insurance expert and a former editor at Policygenius, where she covered life insurance and disability insurance. Her expertise has appeared in Slate, Lifehacker, Little Spoon, and J.D. Power.

Editor & Licensed Life Insurance Expert

Rebecca Shoenthal

Editor & Licensed Life Insurance Expert

gray twitter icon linkgray linkedin icon link

Rebecca Shoenthal is a licensed life, disability, and health insurance expert and a former editor at Policygenius. Her insights about life insurance and finance have appeared in The Wall Street Journal, Fox Business, The Balance, HerMoney, SBLI, and John Hancock.

Expert reviewer

Financial Advisor

Maria Filindras

Financial Advisor

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Maria Filindras is a financial advisor, a licensed Life & Health insurance agent in California, and a member of the Financial Review Council at Policygenius.

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