This article first appeared on fundMyLife, the platform that connects financial planning questions to the right advisers.
Ask any financial adviser about the need for life insurance and the typical response would be to take care of your loved ones during the difficult period should anything unfortunate happen to you.
What about singles with no dependants? Does that mean they don’t need life insurance? If you give it some thought, getting life insurance even when you have no dependants may not be as pointless at it first appears.
# 1 Loans And Debts
For single people with no dependants, think about your debts. If you have co-signed any loans, the entire debt burden will fall upon your co-signers should you pass on. Would your co-signers be able to manage on their own? A life insurance policy naming your co-signer as beneficiary can cover your share of the debt burden, or even the entire debt.
An alternative worth considering is to get a decreasing term life insurance for the loan term. Let’s say you have a $100,000 student loan on a 20-year repayment. You can consider a 20-year decreasing term life insurance to match the loan so that should anything happen to you during the loan term, the insurance would be adequate to pay off the balance. Remember a life insurance policy will protect anyone who faces financial pressure in the event of your death.
# 2 Personal Medical Bills
If you have a heart attack or cancer, who is going to pay for your medical bills and take care of you? Being single with no dependants probably means that all the more you have to be self-reliant should anything happen to you. If your life insurance policy provides for payout under circumstances like permanent disability or critical illness (or if you have bought riders for these), you would be able to receive the sum assured in critical times like these to deal with short-term financial needs.
# 3 Bereavement Expenses
Let’s not forget that death itself is a costly event too. The costs of a funeral, cremation, gravesite and other expenses such as obituaries, can amount up to $10,000. A life insurance policy can help to alleviate these expenses during a difficult time. Grieving is hard enough – let’s not exacerbate the situation with a hefty bill for our relatives/ friends.
# 4 Leaving A Legacy
Although you might be single with no dependants, you can still leave a legacy by donating your life insurance proceeds to a non-profit organisation or to support a cause in your name. You might not have children, but you might have your favorite nieces and nephews. In the case that you have siblings and they have children, you can also name any of them as your beneficiary.
# 5 Things Might Change
We don’t mean to sound like annoying relatives during Chinese New Year who probe about your love life (or a lack of), but life is full of surprises – you’d never know what life has in store for you. Who knows? You may meet your partner in your golden years or have a dependant in the future. Don’t wait till it’s too late when your premium gets too expensive or even become uninsurable. After all for life insurance, sooner is always better than later!
# 6 Retirement Planning, Savings And Investments
A common myth about life insurance is its purpose in simply providing death benefit for the named beneficiaries. However, life insurance can be used to meet retirement planning, savings and investment needs too. For example, annuities are a form of life insurance that provide a regular stream of income upon reaching retirement age. Annuities have death benefits as well so you can assist loved ones other than your dependants.
Not everyone’s needs are the same, so do explore the different life insurance products that can help you with financial planning such as building up cash values and providing annuity during retirement!