Do You Need Life Insurance?
As a general rule, if your death will have a financial impact on anyone, you should consider purchasing life insurance. If you don't fit into that category, you should think about investing your money somewhere else.
People who may need life insurance
Single parents
If you are a single parent with at least one child who relies heavily on your time and resources to care for them while they are young, you should consider purchasing life insurance. Why? Because if you died unexpectedly, many people (including your children and future caregivers) could face financial hardship.
Most people in this situation want to know that their children will have a prosperous and fulfilling life even if they are not present. Obtaining life insurance will ensure that this is possible.
Married couples (with or without children)
Married couples are typically (in varying degrees) dependent on one another. Whether you need your spouse's income or homemaking services, you probably rely on them in some financial or non-financial capacity. If they die, you will almost certainly need to compensate for their time or money.
Anybody with dependents
We've already talked about making sure your children are taken care of if you die unexpectedly, but dependents aren't always children. Ill-prepared parents may also rely on their adult children's funds to help pay for their retirement years. Paying for elder care (nursing homes, assisted living facilities, or in-home care) can be extremely expensive. If you are suddenly unable to contribute financially, life insurance proceeds can be used to continue their care.
People who may not need life insurance
Single people
The majority of single people have no one relying on their ability to earn money in the future (at least not yet). As a result, unless you are purchasing a policy in anticipation of an upcoming event in your life, such as the birth of a child or marriage, life insurance is unnecessary.
Anybody without dependents
You don't need life insurance if you don't have any dependents (children, spouses, or parents) who rely on you. Your untimely death will most likely not place undue financial strain on others.
Wealthy individuals
If you've saved enough money to support loved ones who are still in need, you may not need life insurance. Assuming your assets (ideally, liquid assets) are sufficient to cover everything from funeral costs to estate taxes to your loved ones' future cost of living, you may wish to forego purchasing a life insurance policy.
Still not sure?
Because certain types of life insurance, such as term life insurance, are very affordable, we believe you should always follow the adage "better safe than sorry." Monthly premiums can vary greatly, but as a general guideline, the average cost of life insurance for a $500,000, 20-year term policy is around $126 per month, or possibly less. Shop around and get quotes from a few different insurance companies so you can compare prices and make an informed decision.