A life insurance policy is basically an agreement between the policyholder and the insurance company that states that if, under unforeseen and unfortunate circumstances, the policy holder passes away, and then his or her family would get a lump sum amount to fulfill their financial needs.
This amount, called the death benefit, is completely tax-free and the family or the beneficiary(ies) can choose what they want to do with it. The insured person has to pay a monthly premium to the insurance company for a specified number of years, depending on the type of life insurance.
There are two main types of life insurance policies that a person may need, a whole life insurance and a term life insurance.
Whole Life Insurance
This type of insurance policy is meant to last for the whole lifetime of the insured person, or till the maturity date, provided that all premiums are paid.
Term Life Insurance
A term life insurance insured provides coverage to the insured person for a specified term, like 5, 10, 20-30 years. After the term is over, the policyholder may extend his or her policy or convert to a whole life insurance. I actually prefer term insurance for most of my clients.
Do I Need Life Insurance? I Am Single With No Dependents
At some point in your life, you was or probably will be approach by an insurance salesperson who will say that you need life insurance – even if you are single with no dependents. Nonsense! If you’re single and have absolutely no one depending on you for their financial stability, then you do not require life insurance. But, if you want to cover any costs that may come up after your death, like a funeral or if you wish to leave someone you care for a substantial amount of money for their welfare, then a life insurance can be considered.
Who Needs A Life Insurance Policy?
When it comes to the age-old and question of whether you actually need life insurance, the answers are many. It all depends on what stage of life you’re in and what your goal is to buy life insurance. Of course, the primary goal of any life insurance is to secure your family’s finances if you pass away. It is a way to ensure that your family can carry out their day to day expenses like paying bills, rent or a mortgage, car note, etc. So, who should get life insurance and when they should get it, depends on a lot of factors. There are two life situations below in which I believe when one(single)should opt for life insurance.
Young and Single People
If there is someonewho needs life insurance the least, it is very young individuals. In most cases, very young people that are single and who do not have anyone depending on them for their finances really do not require life insurance.
However, one reason why a young person may want to take out a life insurance policy at an early age is to make sure that the premiums stay low even when the person actually needs life insurance after a few years. If you plan to get married or have children in the very near future, then purchasing life insurance may be a good idea. You have to remember that premiums increase as a person ages and so does the probability of diseases, leading to problems in your medical test.
A Single Person With a Home Mortgage
Purchasing a home is typically the biggest purchase of your lifetime, and the mortgage is the single largest debt most people will ever owe. Protecting that investment with life insurancefor homeowners is a smart move. Think about what could happen if you or your spouse dies with no life insurance coverage. How would those mortgage payments get made? What would happen to your family home?
Buying a house is a big step in many people’s lives – whether you are a first time home buyeror have some experience in real estate. Most people take out a mortgage in order to accomplish this piece of the dream. With the average length of a mortgage 30 years, it is important to provide long-term protection for you with a term life insurance plan for homeowners.
A Life Insurance policycan help relieve that stress and worry for homeowners. The duration of the term life policy can be matched to the mortgage length, from as low as 10 years up to 35 years. You may also want to purchase a coverage amount of your policy equivalent to your home value. Monthly premiums on a term life policy can be reasonable for the amount of protection you can get, especially if you’re young and lead a healthy lifestyle.
A Final Note
If you’re single, have no dependents, and no one depending on your income, you probably do not need life insurance. Life insurance agents will always tell you that you need insurance because they live on commission and want to fill their pockets. Not all of them think that way but many of them do.
However, if you plan on getting married, having children, purchasing a home (single or married), or leaving a large sum of money to an organization or a special individual, then purchasing a life insurance policy is suitable and will give you more bang for your buck.