Three times you think you don’t need life insurance (but actually do)

When people rely on you financially, a life insurance policy is a necessity to protect them from financial hardship if you die. But if you’re single and have no dependents you may need life insurance coverage too.

Life insurance coverage isn’t just important for married couples with kids — it’s a necessary risk management tool for people in various stages of life. Here’s when you should get life insurance, even if you don’t think you need it:

You don’t have dependents

Just because no one relies on you for an income doesn’t mean that your family won’t be financially impacted by your death. There are a few instances where even without providing an income for your loved ones, you may need a life insurance policy to financially protect them: 

• You’re planning for the future: Even if you’re single with no dependents now, that doesn’t mean you’ll be riding solo forever. If you’re planning on having a family, you should get coverage ASAP because it’ll be costlier later — life insurance premiums increase by 4.5% to 9% every year you age.

• You have co-signers on a loan: If you die and have any co-signed loans, such as a private student loan for graduate school or a mortgage, your co-signers will become responsible for your debts.

• You have pets: While you technically can’t list your pet as your life insurance beneficiary, you can still leave some of the death benefit to your non-human family members.

You don’t earn an income

Life insurance is technically an income replacement, but even if you don’t earn an income you need to think about the costs that might be associated with your death. Your contribution to your household or any other support you provide still has economic value, even if it’s not in the form of a paycheck. Even if you don’t earn an income, you still need life insurance if:

• You’re a student: Graduate students with private student loans that were co-signed by a parent or partner need insurance so that their co-signers don’t become liable for those loans if they die. Even if you utilize federal student loans, which are canceled if you die before paying them off, if you’re splitting rent, bills, or childcare with a significant other, they’re now liable for the full costs without the support of your loans..

• You’re a stay-at-home parent: Stay-at-home parents may not be paying bills, but their contributions to the household still need to be factored in. Whether it be childcare or work around the house, stay-at-home parents provide vital support that would need to be replaced if they died. A stay-at-home parent’s economic contribution to the household is the equivalent of earning a salary of $184,000.

• You’re retired: Medical bills and the cost of funerals are exorbitantly high, stretching resources thin for those left behind to pay them. The average funeral costs upwards of $7,000. Even if you’re retired and don’t need a million-dollar life insurance policy, you should still get some coverage to protect the finances of the people you leave behind.

You already have a will 

Anyone with an estate and assets should have a will drawn up to protect their heirs after they die — but that isn’t enough. Even with a will in place, you still need life insurance coverage to replace your income if you die suddenly, because a will protects assets you already have — whether that be investments, real estate, or checking and savings accounts. 

But life insurance protects income you would have anticipated making and costs you would have covered in the future. Not only that, but your estate is subject to probate and can be collected by creditors before it’s dispersed to your designated beneficiaries. Life insurance, on the other hand, can only be distributed to the people listed as your beneficiaries. 

When you’re estate planning, setting up a will and a life insurance policy is the best way to guarantee your family’s financial health after you die.

Most people think you only need life insurance if you’re married or have kids, but that’s just not the case. Anyone with financial obligations should get life insurance so that their responsibilities don’t fall onto the shoulders of other people if they die.