- If you’re childless, life insurance might be the last thing on your mind, but I recommend it anyway.
- 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.
- Read more from Personal Finance Insider.
Everyone has financial goals. There are some that a majority of people share—like preparing for retirement — but there are some goals that depend on where you’re at in life, like saving for childcare expenses or a wedding.
Those with children or other dependents often have “get 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 are unmarried?
For most single people in the 20s or 30s, getting life insurance is probably the last thing on your mind (especially if you don’t have children). And I get it: If you’re just starting your career and saving for your money goals, the added monthly life insurance premium seems like an unnecessary expense.
But, as a financial planner, I would recommend everybody get life insurance, including single people. Here’s why.
1. You still have costs to cover
Even though you may not have dependents to financially take care of if you were to unexpectedly die, you still have end-of-life costs. Both
term life insurance
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 into the six figures. If you have private student loans, your debt will unlikely be forgiven if you pass away.
On top of that, if you have a cosigner on your auto loan or mortgage, they’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 pick up 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 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 down the road 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. It’s also affected by certain health conditions, which insurers use to determine how likely you are to die during the coverage term. Because most people’s health declines over time, life insurance costs will typically get more expensive the older you get.
Buying when you’re younger and generally healthier means you’ll get the same coverage for significantly less. An average 20-something or 30-something nonsmoker can expect to pay between $10 and $50 a month for a term life policy depending on the coverage amount. That’s around 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 grow slowly 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 — though you don’t have a choice on where your money 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 investing account through something like variable life insurancewhich allows you to get involved yourself in where your money is being invested, though it’s typically riskier as there’s no guaranteed minimum interest rate.