Single and Childless? You May Still Need Life Insurance

By Markets Fool.com

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Even fun uncles can need life insurance. Source: Flickr user Tammra McCauley.

Many people reasonably assume that if you're single with no children and no one at home to support, you don't need life insurance. Yet there are still plenty of reasons why such a person might need it.

First, a refresher on what life insurance is for. It's not meant to be a financial jackpot that your loved ones win when you die. Instead, it's meant to protect an income stream. It's meant to help provide for those who depend on you if you're no longer able to provide for them yourself. Life insurance comes in two primary forms: whole and term. Whole life insurance is part insurance and part investment, but for many people it's not the best choice of either. Term insurance is generally better, covering you for whatever period of time you need it to. For example, you might buy a 20-year policy to cover you until your kids are on their own.

Single needs
So why might a single person need life insurance? Well, consider that even if you have no children and are supporting no dependents in your home, there might still be loved ones you support or may want to. For example, if you have young nieces or nephews and you're planning to contribute to their educational expenses one day, you may want to ensure that such funding is available for them in case you're not around when they need it. Similarly, you can make money available to help support your parents if you die prematurely.

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Have mom and dad cosigned a big loan for you? Protect them with insurance. Photo: Flickr user Rennett Stowe.

Think, too, of the loved ones who are currently helping you -- for example, by cosigning loans. If you're paying off hefty student loans that your parents have cosigned for, then they're on the hook for a lot of repayments if you die young. A life insurance policy will protect anyone who faces financial pressure in the case of your death. It can also help pay off your mortgage and help keep a business you own running until its future is determined.

Let's not forget death itself, which is a costly event, too. Getting at least a small life insurance policy can serve to cover the costs of a funeral, a gravesite, and other "death-care" expenses, such as an obituary and cremation. Obituaries can cost several hundred dollars, and funeral and cemetery costs can approach or top $10,000.

Dying is expensive, too, and insurance can help. Photo: Wikimedia Commons user Anthony22.

Jeremy Hallett, founder of insurance quote site Quotacy.com, has pointed out another reason dependent-free singles should consider buying life insurance now: the prevailing low-interest-rate environment. Low interest rates help make insurance more affordable, and singles can currently lock in some low prices that they may be grateful for in the future. Policies also cost less when you're younger, especially if you haven't developed the sort of health issues that may crop up later, driving up your insurance costs. So if you may be marrying in the coming years, or if parenthood is looming, you are likely to really need life insurance then, and it might be more costly. Buying it now will also prevent you from being one of the many people who need life insurance but keep putting it off, only to end up dying without it, leaving their loved ones both grieving and financially strapped.

Insurance isn't a very exciting topic, and it can often seem like you're paying for nothing when you don't file claims and collect money, but you're not paying for nothing; you're paying for financial protection, which many of us definitely need.

The article Single and Childless? You May Still Need Life Insurance originally appeared on Fool.com.

Longtime Fool specialist Selena Maranjian, whom you can follow on Twitter,has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.