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Do You Need Life Insurance?

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Do You Need Life Insurance? Business Insider Explains. 10'000 Hours/Getty
  • You need life insurance if you have dependents or people who’ll inherit your debts. 
  • Life insurance can be worthwhile even if you don’t have dependents.
  • Consider your situation, needs, and budget before purchasing life insurance.

Life insurance protects your loved ones from a financial crisis if you pass away early. Insurance is necessary if you have people who financially rely on you. But it can also be advantageous even if you don't have dependents. Read to discover signs you need life insurance and how it can benefit you.

When life insurance is needed

If you're wondering who needs life insurance, the most significant giveaway is that you have dependents. Life insurance ensures that those near and dear to you are cared for financially. 

You have dependents

An unexpected death could spell hardship for your dependents. Life insurance replaces your income so your loved ones maintain their current standard of living, even after you pass away. These are examples of dependents who may benefit from your life insurance policy. 

  • Spouses 
  • Children 
  • Adult children with disabilities 
  • Elderly parents 
  • Domestic partners 
  • Business partners
  • Other relatives who rely on you 

You have significant debts

If you share debts with someone else, life insurance can pay for them when you're gone. For example, if you have signed a mortgage with someone else, your death could make those payments unaffordable for the other person. This could mean losing the home if your partner defaults on payments.

If your loved one defaults on other shared payments, they could face repercussions like damage to their credit score and repossession of their assets. Life insurance gives you the peace of mind that your beneficiaries won't have to deal with those outcomes. 

You want to leave a financial legacy

You may still want life insurance even if you don't have dependents. Instead, you can designate a charity or nonprofit organization as the beneficiary of your policy. Additionally, you can use your life insurance to leave an inheritance, say for your adult children or spouse. 

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When life insurance is beneficial

If you don't have dependents, life insurance could still be beneficial. Covering end-of-life, retirement and long-term care, and estate planning expenses are a few reasons to get life insurance. 

Final expenses

Life insurance can pay for your end-of-life expenses so your loved ones can grieve your death properly. Examples of final expenses include but aren't limited to your: 

  • Funeral service
  • Casket or urn 
  • Burial plot 
  • Cremation 
  • Transportation 
  • Outstanding medical bills

Retirement and long-term care expenses 

Permanent life insurance policies build cash value. Unlike your death benefit, you can withdraw or borrow from your cash value within your lifetime. Policyholders may use it to supplement their income in retirement or pay for long-term care if they become chronically ill or disabled, particularly due to age. 

Estate planning expenses

Your beneficiaries could incur hefty taxes and fees when inheriting a large estate. Your beneficiaries can use the proceeds of your policy to pay for those costs, as generally, life insurance isn't taxable

When life insurance isn't needed

Life insurance is an important tool for many people, especially those with dependents. However, there are certain instances where insurance may not be necessary or economical. 

You have no dependents and minimal debt

Life insurance primarily protects those who rely on you financially. So, if you don't have dependents or debt cosigners, you may not need life insurance.

Even if you have no dependents and minimal financial obligations, having a policy could still be a good idea. Waiting too long comes with an opportunity cost. Insurers will raise premiums as you age and start to develop health issues. 

Buying life insurance while young and healthy allows you to lock in low rates and insurability. This is especially helpful if you anticipate caring for dependents in the future. 

You have significant savings

High-net-worth individuals with minimal debts and significant savings may find that they don't need to pay extra premiums for insurance. This is especially true if you're confident that your dependents are financially secure without your income.

You're approaching retirement age

If you're approaching retirement age and you don't have financial dependents or obligations, life insurance may not be necessary. Even if you have dependents, weigh the cost against the benefit of getting life insurance now before buying a policy.

If you are a senior with health problems, you may see higher premiums on your policy and smaller coverage amounts. Consider looking at alternatives to address your dependent's financial needs, such as saving and investment vehicles or group life insurance. 

Compare life insurance options

Ethos Life
Get quotes
On Ethos's website
Insider’s Rating
A five pointed star A five pointed star A five pointed star A five pointed star A five pointed star
4.37/5
Icon of check mark inside a promo stamp It indicates a confirmed selection.
Perks

Learn why Ethos was rated as Business Insider's best life insurance for guaranteed coverage. Apply for life insurance online in just a few minutes with Ethos' simple application. No medical exams are required. Just answer a few health questions—many customers enjoy same-day coverage!

JD Power Customer Satisfaction Rating

Not Rated

AM Best Financial Strength Rating

A

Pros
  • Check mark icon A check mark. It indicates a confirmation of your intended interaction. 100% online application process, quotes in minutes
  • Check mark icon A check mark. It indicates a confirmation of your intended interaction. Coverage starts immediately once approved
  • Check mark icon A check mark. It indicates a confirmation of your intended interaction. Term policies renewable up to age 94 for qualifying applicants
Cons
  • con icon Two crossed lines that form an 'X'. No conversion options to turn term policies to whole life for no exam policies
  • con icon Two crossed lines that form an 'X'. Whole life policy limits are lower
Corebridge Direct
Get quotes
On Corebridge's website
Insider’s Rating
A five pointed star A five pointed star A five pointed star A five pointed star A five pointed star
4.25/5
Icon of check mark inside a promo stamp It indicates a confirmed selection.
Perks

Corebridge is rated Business Insider's best affordable term life insurance and the best company for universal life insurance coverage. Get $250,000 of Term Life Insurance Coverage for as low as $13 per month.

JD Power Customer Satisfaction Rating

762

AM Best Financial Strength Rating

A

Average Price

$19 for males and $16 for females per month

Deductible Options

N/A

Reimbursement Options

Up to $2 million

Pros
  • Check mark icon A check mark. It indicates a confirmation of your intended interaction. Guaranteed life insurance available for seniors between 50 and 80
  • Check mark icon A check mark. It indicates a confirmation of your intended interaction. High financial strength and customer service ratings
Cons
  • con icon Two crossed lines that form an 'X'. Some policies only have benefits up to $25,000
  • con icon Two crossed lines that form an 'X'. AIG may not offer more extensive death benefits for seniors
Amica Life Insurance
Get quotes
On Amica's website
Insider’s Rating
A five pointed star A five pointed star A five pointed star A five pointed star A five pointed star
3.87/5
Icon of check mark inside a promo stamp It indicates a confirmed selection.
Perks

Business Insider considers Amica to be a strong contender for term and whole life coverage. Compare options and discover the right policy for you.

JD Power Customer Satisfaction Rating

N/A

AM Best Financial Strength Rating

A+ (Superior)

Pros
  • Check mark icon A check mark. It indicates a confirmation of your intended interaction. Offers level term and whole life policy
  • Check mark icon A check mark. It indicates a confirmation of your intended interaction. Discount and bundling opportunities
  • Check mark icon A check mark. It indicates a confirmation of your intended interaction. Available in all 50 states
Cons
  • con icon Two crossed lines that form an 'X'. Limited add-on coverage options
  • con icon Two crossed lines that form an 'X'. No universal policies
  • con icon Two crossed lines that form an 'X'. Online complains indicating life insurance service does not match other Amica products
Product Details
  • Term life and whole life

FAQs

Do I need life insurance if I'm young and single?

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If you're young and single, you may need life insurance if you have dependents. If not, life insurance may still be beneficial. Purchasing life insurance while young and healthy helps you lock in competitive rates and your insurability. 

Can I get life insurance if I have health problems?

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Getting life insurance is possible, even if you have health problems. However, this depends on your overall risk profile. An alternative to traditional life insurance is no-medical exam insurance. By opting out of the medical exam requirements, you improve your chances of insurability. However, these policies usually have higher rates and lower coverage limits. 

Do I need life insurance if my spouse has coverage?

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If your spouse has coverage, you'll likely need to buy life insurance if you have dependents. Unless you have joint insurance, each policy only covers one person. So, if you die, your spouse's insurance won't cover you. 

How much life insurance coverage do I need?

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The amount of coverage you need depends on your family's financial needs. Use an online life insurance calculator to estimate your coverage needs based on current and future expenses. In addition, you can consult an independent agent or a financial advisor for more personalized advice. 

Is life insurance expensive?

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Whether life insurance is expensive depends on various factors, such as age, health, gender, occupation, and lifestyle. The type of coverage also determines the price of your policy. Whole life insurance is significantly more expensive than a term life insurance policy because it offers lifelong coverage and a cash value component.

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