Life insurance is one of those things that nobody wants to deal with, like scheduling a dentist appointment, or having to tell the waiter that your burger is dangerously undercooked.
But at some point, you have to think about end-of-life situations and consider the impact your absence will have.
Since the purpose of life insurance is to provide a financial payout to your beneficiaries when you die (typically spouse/children), I've been asked a few times if it's worth paying for a policy when you're single.
Like most things in personal finance, it depends. In a general sense, you don't necessarily need it. But these are a few things to think about:
If you plan to get married or have kids in the future, getting a policy while you're younger and still single can save on the overall costs because insurance is generally cheaper the younger you are.
For example, the average cost of a $500,000 20 year term life policy for a 30 year old man is $34/month and for a 50 year old, the same policy would cost $127.50/month (for standard applicants). That's more than a thousand dollar difference each year.
Also, the longer you wait, the higher the chance of something happening to your health that could drastically increase the cost of coverage, so locking in a low rate prior can make sense
If you have outstanding debts - such as private student loans, a mortgage, or credit cards - it can make sense to get a policy that covers the cost of paying these off so that your family has less to deal with after the fact
If you've maxed out all other investment accounts and have a large cash reserve, getting a life insurance policy can make sense as a way to store a portion of your wealth
If you want to remove the financial burden of end-of-life costs for family members - funerals aren't free, costing $7k-$12k on average. Also, hospice care or long hospital stays can end up costing tens to hundreds of thousands of dollars.
If you want to leave a legacy - even if you don't have a spouse or kids, you can set charities or other organizations to be the recipient of your policy's payout (or even other family members).
Life insurance makes sense for a lot of people, but you want to be sure that you understand the difference between term insurance and permanent insurance.
There are a lot of details that differentiate the two, but the main things to know are:
Term insurance only covers you for a certain term (like 10, 15, or 20 years) and then you'd need to get another policy when it ends
Permanent insurance generally lasts until you die, as long as you keep paying the high monthly premiums
Term insurance is a much better option for a majority of people because the costs are way lower and you can get millions of dollars in coverage for a fraction of the cost of permanent policies.
These are the average annual costs for just $500,000 coverage with permanent insurance:
Some popular, low-cost online brokerages to find term insurance are Lemonade and Ladder (no affiliation)
So overall, you don't necessarily need life insurance - but getting a term policy when you're single can make sense in a few different scenarios, especially if you can afford the relatively small cost.