- If you don’t have kids, life insurance might be the last thing on your mind, but I still recommend it.
- Your family still has funeral costs to cover if you die, and buying now means paying less over time.
- Having a life insurance policy can also help you build wealth over time.
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Everyone has financial goals. There are some that the majority of people share – like preparing for retirement – but there are some goals that depend on where you are in life, like saving for childcare costs. children or marriage.
Those with children or other dependents often have “buying life insurance” on their to-do list, as it’s an important way to financially protect your family if the unexpected happens. But what if you don’t have kids or aren’t married?
For most single people in their 20s or 30s, buying life insurance is probably the last thing on your mind (especially if you don’t have kids). And I get it: if you’re just starting your career and saving for your financial goals, the extra monthly life insurance premium seems like an unnecessary expense.
But, as a financial planner, I would recommend everyone take out life insurance, including for single people. Here’s why.
1. You still have costs to cover
Even if you don’t have dependents to take care of financially if you die unexpectedly, you still have end-of-life costs. Both
and permanent life insurance policies provide a death benefit to your family to cover expenses like your funeral.
Many Americans are in debt, especially student loan debt, which can easily reach six figures. If you have private student loans, your debt probably won’t be forgiven if you die.
On top of that, if you have a co-signer for your car loan or mortgage, they will be responsible for those costs. Life insurance is a great way to help cover some of these costs and financially protect your loved ones from having to pay your bill.
If you have permanent life insurance, you can even use your policy to protect against future health costs — or any future costs, for that matter. These policies never expire and have a cash value component, allowing you to build wealth over time.
Your policy can effectively be used as a savings account, and you can access cash value on the go and use that money for virtually anything, from medical bills to long-term care to home repairs. .
2. Life insurance can save you money in the long run
The cost of life insurance depends on several factors, including age, gender, benefit amount, length of contract, and health status. It is also affected by certain health conditions, which insurers use to determine the likelihood of you dying during the term of coverage. Since most people’s health deteriorates over time, life insurance costs generally increase with age.
Buying when you’re younger and generally healthier means you’ll get the same coverage for a lot less. The average non-smoker in their 20s or 30s can expect to pay between $10 and $50 per month for a term life insurance policy, depending on the amount of coverage. It’s about a dollar a day for peace of mind.
3. Life insurance can help you build wealth over time
The cash value of permanent life insurance policies will slowly increase over time, allowing you to build wealth.
Some types of life insurance, like universal life insurance, come with a guaranteed minimum interest rate and invest your cash value in the stock market, although you have no choice but where your money goes. is invested. It’s a relatively safe way to grow your money over a long period of time.
If you want more control (and more risk), you can treat your life insurance policy like an investment account through something like variable life insurance, which lets you get involved in the process yourself. where your money is invested, although it is generally more risky because there is no guaranteed minimum interest rate.