5 Reasons Singles Need Life Insurance, Too

Life insurance is something only married people need, right? As with so many personal finance questions, the answer to this one is – it depends.

There are several reasons you might want to purchase life insurance even when you’re single, though you may need less coverage than someone who wants to provide for a surviving spouse or children. That’s because there may be other family members or loved ones who could be affected financially in the event of your death.

Many single people are now pondering buying life insurance, given that more adult Americans today are single than are married and that the median age at first marriages has never been higher. Young adults today are also waiting longer to buy homes or have children, milestones typically associated with the purchase of life insurance.

Life insurers are actively reaching out to millennials (who are more likely to be single) by making their offerings more web- and mobile-friendly and by marketing their policies in unexpected places like Wal-Mart and Costco. 

Many consumers get a basic life policy through work, which could cover the needs of a single person without dependents. Remember, though, that if you leave your job, your coverage doesn’t come with you.

Here are five reasons to consider purchasing a policy, even if you’re not married

1. It’s cheaper to buy a policy when you’re young and healthy. Not every young person needs life insurance – and if you haven’t yet established an emergency fund or you’re still living on your parents’ couch, buying life insurance certainly shouldn’t be a top priority. If, however, you’re making the maximum contribution to your retirement fund and have six months of expenses stashed in a savings account, you may want to consider buying a policy.

Waiting to get coverage until you’re married or have children could make a policy much more costly. A $500,000, 30-year term policy for a healthy, non-smoking male in Chicago costs about $35 per month. The same policy for a 45-year-old runs more than $60 per month, according to calculations by Term4Sale.com.

Another reason not to wait: The older you get, the more likely you are to contract a chronic health condition, which could push up your life insurance premiums or make you ineligible for coverage at all. Buying a policy now will lock in coverage while you’re still in good health and qualify for the best rates.

2. You’ve got co-signed loans or are worried about funeral costs. If your parents (or other family member or friend) co-signed a student loan or a mortgage with you, they’ll be fully on the hook for the amount owed in the event of your passing. In addition to debt, burial costs can also be expensive – the average funeral costs more than $7,000 – and it can set back loved ones without a significant amount of savings.

If your funeral or your debts will be a significant financial hardship for someone else, consider getting a low-cost policy to cover those expenses – a 10-year term policy naming that person as the beneficiary could take care of such expenses. With unemployment still stubbornly high and most Americans with dangerously low savings accounts, the last burden a grieving family member needs is a loan company hounding him or her for payments.

Waiting to get coverage until you’re married or have children could make a policy much more costly. A $500,000, 30-year term policy for a healthy, non-smoking male in Chicago costs about $35 per month. The same policy for a 45-year-old runs more than $60 per month, according to calculations by Term4Sale.com.

Another reason not to wait: The older you get, the more likely you are to contract a chronic health condition, which could push up your life insurance premiums or make you ineligible for coverage at all. Buying a policy now will lock in coverage while you’re still in good health and qualify for the best rates.

2. You’ve got co-signed loans or are worried about funeral costs. If your parents (or other family member or friend) co-signed a student loan or a mortgage with you, they’ll be fully on the hook for the amount owed in the event of your passing. In addition to debt, burial costs can also be expensive – the average funeral costs more than $7,000 – and it can set back loved ones without a significant amount of savings.

If your funeral or your debts will be a significant financial hardship for someone else, consider getting a low-cost policy to cover those expenses – a 10-year term policy naming that person as the beneficiary could take care of such expenses. With unemployment still stubbornly high and most Americans with dangerously low savings accounts, the last burden a grieving family member needs is a loan company hounding him or her for payments.

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When Should You Purchase Life Insurance?

No one wants to admit that they could die prematurely. But the last thing you want is to not have the proper life insurance policy in place should disaster strike.

Danny Kofke, a special education teacher in Jackson County, Ga., knew he needed life insurance shortly after getting married 12 years ago. He and his wife, Tracy, were planning to have children, and they wanted Tracy to be able to stay home for at least a year to raise the child. “Since we would be depending on my teacher’s salary alone to get by, we took out an insurance policy for each of us,” Danny Kofke says.

The couple’s 10-year term life insurance policy covered them for $250,000 each, which equated to a $24.50 monthly fee per person. “It gave us both peace of mind,” Danny Kofke says. “We treated it like having automobile insurance. I never want to have to use it, but it’s comforting to have it there.” The Kofkes, however, had to take out another 10-year term life insurance policy this year since the old one expired.

Although the length of the original policy wasn’t right for their needs, the Kofkes wisely opted for a term life insurance policy over whole life insurance. The difference between whole and term—the two basic types of life insurance—is that whole is a lifelong policy with an added investment component to it, wherein you can build up cash tax-free. However, the built-in fees, commissions, and surrender charges (in the event you cancel the policy) take such a significant chunk out of your investment that most personal-finance experts agree there are better places to invest your money. Whole life insurance plans also typically carry premiums that are up to 10 times that of term insurance. Meanwhile, with term life insurance, in exchange for fixed premiums that you pay monthly, quarterly, or annually, you are covered for a set number of years and only receive death benefits.

While some life insurance agents aim to guide you toward whole life insurance over term life insurance (whole means more commission for them), term makes more sense for most people, says Tony Steuer, a life insurance consultant and author of Questions and Answers on Life Insurance: The Life Insurance Toolbox. “Term coverage is the appropriate coverage for most individuals, as their needs are for a certain term of years while their other assets accumulate, such as retirement savings,” he says.

Robert Miller, president of the National Association of Insurance and Financial Advisors, agrees with Steuer that term insurance is usually the best route. “I’ve always believed in insuring up to the point that you need insurance,” he says. “You can do that with term insurance and it comes out to be far cheaper.”

Steuer recommends guaranteed level premium term insurance, where the premium is set at a fixed rate for a specific period of time. “I match the length of the term period to the anticipated period of need,” he says. “For example, with a 2-year-old child and a client purchasing a 20-year guaranteed-level premium term to take care of the child, that would provide coverage until the child is 22.”

There are a few select circumstances where you might be better off with whole life insurance. For example, if you have children who are handicapped and will be financially dependent on you their whole lives, you may want to consider the permanent coverage.

Americans struggling with their finances in today’s downtrodden economy may think they can save money by skimping on life insurance. Approximately 30 percent of U.S. households have no life insurance coverage, according to a 2010 study conducted by LIMRA, an insurance industry research outfit. And among households with children under 18, 11 million have no coverage.

But for parents who still have children living at home, not having a life insurance policy could put their kids at risk if something were to happen to them. In the event the parents die, a life insurance policy can provide a safety net for the children to live off of.

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Why Now is a Good Time to Think About Life Insurance

Winter is in full swing and winter may mean snow and ice, but it can also mean the flu and colds. Gross weather, freezing cold temperatures, and all those germs being spread around the office or classroom has us thinking about health. What are you doing to stay healthy? What are you doing to keep the kids healthy? Best practices, like washing your hands and loading up on your vitamin C are a must for this time of year, especially.

“What does health have to do with insurance?” is something you may be wondering. Health, is one factor when it comes to life insurance and we think it’s a great time to think about life insurance The common cold isn’t anything serious, but while you are relatively healthy, think about life insurance. Just like any other type of insurance, it’s important to be proactive and obtain coverage before it is too late.

In addition to health, there are many other factors in determining health insurance. There are also a lot of questions about life insurance. Life insurance is a difficult subject and it tends to be something people put off, but it should be something that everyone talks to their insurance agent about. Find out your options, how much coverage you may need for you and your family, and get a quote to find out how much it would cost you. Even those that have life insurance through work should consult an agent. What happens if you lose your job and is that coverage offered enough for your life?

Below we take a look at some of the questions you should ask and some answers you should know about life insurance and your options:

What are you options when it comes to life insurance?

whole life insurance and team life insurance are the options. Whole life grows in cash value over time, but is more expensive as well. On the other hand, Term Life Insurance costs less, but does not grow in cash value. As the name states, term life insurance also is only for a period of time. Maybe you have a term life insurance policy until

What can life insurance cover?

Life insurance can help your family pay funeral costs, can help pay for childrens’ education, and lost wages or earnings. All of these items can add up and without the help of life insurance could leave your family in debt, having to sell your home, or worse.

How Does Health Affect Your Life Insurance?

To put it simply, anything that makes you less risky is good for your life insurance rate. For example, having a favorable height to weight ratio and being a non-smoker could both save you money. They would also need to know if you were on any medication and about your family’s health. In addition, your age would also be a factor.

When is the best time to buy life insurance?

Fact: life insurance is less expensive for young people. This means the younger you get it the better off you are. Also, big life events make a great time to buy life insurance. Some examples are if you are getting married, having a baby, buying a home, etc. Those are all scenarios that involve others depending on you or major bills. Life insurance can offer the people around you help if something goes wrong.

Why is it important for someone with a family to have it?

One of the reasons a lot of people with children get life insurance, aside from the obvious, is that it could help pay for college, pay off the mortgage and loans. life insurance can help your family continue to live a life they are accustomed to if something were to happen to you. The average funeral can cost $6,000 to $10,000. Having life insurance can help your family in the event that they need to pay that.

Life insurance is a touchy subject, but as your insurance agent we must inform you of just how much it can do for your family if something were to happen to you. Unfortunately, we can never predict what will happen and it’s important to prepare for the worst. Give our agents a call today at 888.865.1244 and they can help guide you to the right life insurance policy for you and your situation.

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Unique Financial Dreams

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We Had the Cutest Reason Ever to Buy Life Insurance

Every one of us has had “aha! moments.” Epiphanies. Days when we reach a crossroads and realize that we have to make some changes. For the next two months, we’re sharing moments like those in our Life Stage Lessons series: Real stories straight from the financial lives of our DailyFinance contributors about times when they realized they were due for a serious course correction. So read on, learn from our mistakes, and get inspired to improve your relationship with your money.

Nothing puts things into perspective quite like bringing a new life into this world. My husband and I spent our first five years of marriage getting out of debt, building a small savings nest egg, and preparing every way we knew how for the day we became parents. And then that day came. Despite all our prepping, we quickly realized we had no idea what we were doing. We also realized it was high time to look into life insurance.

Buying life insurance before our daughter was born didn’t occur to either of us. If the unthinkable had happened and either of us were left without a spouse, the survivor wold have been fine financially. We each had a career, and we were debt-free. But once we were affectionately titled “Mama” and “Dadda,” all that changed. Our family now included a third human who had to be cared for and paid for — and who couldn’t earn her own keep. And that’s when we got serious.

If you’re in a similar place in your life, remember these three key factors:

• Many employers provide life insurance as part of your benefits.You can add coverage through your employer’s insurer (talk with your human resources department to see how those costs and policies stack up) or supplement your coverage with an outside firm. Since neither of our employers offered enough life insurance for our needs, my husband and I added supplemental insurance.
• Figure out what it will really take to cover your needs. If you’re married, ask yourself what would be on the line financially if you or your spouse passed away. And then calculate how much you’d need to make up that income, long term. A good starting point is 10 to 12 times each income. If you have unusual financial obligations, you may want an amount even higher than that.
• There are two kinds of life insurance: term and whole. Most financial gurus recommend term life, and warn that the “benefits” of whole life aren’t worth its higher costs in the long run. We ended up choosing a term life insurance plan.

Once you have the life insurance angle covered, you may want to look into other ways to prepare for the worst — or bad situations that aren’t quite the worst. If your spouse is the only one working, you could look into going back to school or honing a vocational skill to be workforce-ready. You’ll never regret making sure both spouses are prepared educationally, physically, and — of course — financially in the event that something unforeseen happens. Most importantly, you’ll be able to rest easy knowing your children will be provided for in any scenario.

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