- If you don’t have kids, life insurance may be the last thing on your mind, but I recommend it anyway.
- Your family still has to cover funeral costs if you die, and buying now means paying less over time.
- Having a life insurance policy can also help you build wealth over time.
- Read more from Personal Finance Insider.
Everyone has financial goals. There are some that most people share, like preparing for retirement — but there are some goals that depend on where you are in life, like saving for child care or a wedding.
Those with children or other dependents often have “get life insurance” on your to-do list, as it’s an important way to financially protect your family if something unexpected happens. But what if you don’t have kids or aren’t married?
For most single people in their 20s and 30s, getting life insurance is probably the last thing on their minds (especially if they don’t have kids). And I get it: If you’re just starting out in your career and saving for your money goals, the extra monthly life insurance premium seems like an unnecessary expense.
But, as a financial planner, I would recommend everyone get life insurance, including single people. This is why.
1. You still have costs to cover
Although you may not have dependents to care for 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 such as your funeral.
Many Americans are in debt, especially student loan debt, which can easily reach six figures. If you have private student loans, it’s unlikely your debt will be forgiven if you die.
On top of that, if you have a cosigner on your auto loan or mortgage, you’ll 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 foot your bill.
if you have permanent life insuranceYou can even use your policy to protect yourself against future health costs, or any future costs, for that matter. These policies never expire and come with a cash value component, allowing you to build wealth over time.
Your policy can effectively be used like a savings account, and you can access the cash value in the future and use that money for basically anything from medical costs 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, term length, and health. You are also affected by certain health conditions, which insurers use to determine how likely you are to die during the coverage period. Because most people’s health gets worse over time, life insurance costs will generally be higher as you get older.
Buying when you’re younger and generally healthier means you’ll get the same coverage for much less. An average non-smoker in their 20s or 30s can expect to pay between $10 and $50 a month for a term life policy depending on the amount of coverage. That’s about a dollar a day for your peace of mind.
3. Life insurance can help you build wealth over time
The cash value of permanent life insurance policies will grow slowly over time, allowing you to build wealth.
Some types of life insurance, such as universal life insurance, come with a guaranteed minimum interest rate and invest your cash value in the stock market, even though you don’t get to choose where to invest your money. It is 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 insurancewhich allows you to get involved in where your money is invested, although it is usually riskier as there is no guaranteed minimum interest rate.