Are you single? You might be wondering whether or not life insurance is absolutely necessary. Given the nature of the single life, you might be thinking that there is no one that depends on you, therefore you might not need life insurance at all. Today, we’ll discuss when life insurance is necessary when you’re single. Learn why single people also need life insurance with Malhotra & Assoc. Insurance
There are definite times when single people need life insurance
Being single doesn’t mean that your expenses don’t get transferred to someone else in the event of death. While grim indeed, believe it or not, there are definite times when life insurance is helpful, even if you’re single. Ultimately, asking yourself: do my assets exceed my liabilities? In most cases, in the event of a death, your assets will be used to pay off any existing debts and liabilities you have. In the instance where your assets do not exceed your liabilities, any loans or accounts that have cosigners attached to them, will be transferred to those cosigners. There are many examples and exceptions to this, but some debts or liabilities to consider that you might have include:
- Student Loans: Although student loans are typically discharged for federal loans in the event of the borrower’s death, private student loans are typically not eligible for discharge and are transferred to any co-signers of the loan
- Mortgages: When you pass away, although your mortgage debt isn’t transferred directly to anyone other than any co-signers on the mortgage. It’s important to note that a life insurance policy can provide death benefits to an heir you designate, in the event that you’d like to transfer ownership of your house to someone else or provide money to the cosigners on your mortgage debt
- Co-Signed Loans: These are loans that are in your name where you’ve asked a co-signer to add their name to the loan. These loans include but are not limited to: private student loans, personal loans, auto loans and many more. In the event of the primary borrower’s death, those loans are transferred over to the co-signer of the loans.
In general, there are several events and scenarios that might contribute to the necessity of life insurance. Speak with our team of specialists today to learn about when life insurance might help you.
Even though you’re single, you could have people that depend on you
You might have other people relying on you and depend on income or assistance that’s provided by you. A lot of us have dependents that aren’t our biological children. Some examples include grandparents, parents or relatives that might depend on your income assistance for health care or living expenses. If this applies to you, a life insurance policy and death benefits can continue to support those that matter to you after death. This is certainly an important consideration to make, and it’s important to take this into account when considering whether or not to purchase life insurance.
A life insurance policy could pay for your final expenses
Final expenses are those that are related to any celebratory ceremonies or funeral costs associated with someone when they pass away. Some other examples of final expenses include any medical bills that may be associated with you as well. Life insurance helps to cover final expenses and to ensure your loved ones aren’t burdened with these last expenses.
You can lock in coverage while you’re young
When you’re in your 20s or 30s, the last thing on your mind is probably death. There are many advantages to purchasing life insurance when you’re young, because you can lock in coverages at typically lower premiums and have a higher chance of approval. When you’re younger, you’re considered to be a lower risk from a health perspective making you more insurable and less prone to higher rates. Once you’re older, the likelihood of paying higher life-insurance premiums is more likely. You can expect to pay 4-5x more, once you reach past the age of 50. Right now, you might not be married or have children or a house or anything like that. Purchasing a life insurance policy, can guarantee that your future expenses and dependents are cared for.
If you own a business a life insurance policy can pay off loans and other obligations
A life insurance policy could be helpful if you own a business. It’ll help to safeguard your business against your death and your death benefits can be used to help pay off loans and other obligations. If you have business partners, life insurance will help them to move your business forward so it can continue to build value after you pass away. If you’re in charge of the day to day operations of your business, it can be very hard for your business to replace you. Having a life insurance policy will help your business partners use your death benefits as an income replacement or for borrower obligations. This is especially important if your business doesn’t offer retirement benefits, group life or disability benefits to its employees.
You could leave money to a church, charity, or school
Although the primary purpose of a life insurance policy is to provide a safety net for your loved ones and beneficiaries,you could give back to causes and organizations that matter to you. If you’re interested in this, you might be wondering whether or not a term life insurance policy or a permanent life insurance policy is suitable in this scenario. A permanent life insurance policy will ensure that the charity you designate will make it to them. That is because the life insurance policy wil remain in force, assuming you make regular premium payments. Additionally, the charitable organization that is listed as your beneficiary can also avail the option of surrendering the life insurance policy for cash when you transfer ownership of that life insurance policy over to them. If this is something that you’re interested in, you’ll need to name the beneficiary as the charitable organization you’d like to donate the policy benefits and note their Tax ID. Although, this question can become more complicated as some life insurance providers ask whether or not the charitable organization has an “insurable interest” meaning can that organization justify financial losses in the event of your death. This might lead to denial of your life insurance policy beneficiary.
What age should I get a life insurance policy?
When you’re considering purchasing life insurance, it’s important to consider whether or not to buy term life insurance or permanent life insurance or even both. Term life insurance will cover you for a predefined period (anywhere between 5-30 years). This coverage option tends to have lower premiums and be more affordable. Permanent life insurance remains in force for the span of your entire life, and tends to have higher premiums. Some factors that drive this decision include the length of time you need insurance, the amount of coverage it provides and what you can realistically afford. Term life insurance will only be valid for the length of the policy. Meaning, that death benefits are only able to be drawn throughout the length of the policy term and not beyond that. Typically renewals of term life insurance can be costly, and a good example to consider is if you take out a term life insurance when you’re 30 and renew it when you’re 60 the premium amounts during those two terms will be significantly different and higher in comparison. Permanent life insurance provides full coverage throughout the span of your life and can be used as an investment vehicle to draw money from or borrow against.Typically your investment will net an annual return that can be used if you surrender your policy. The age that is most suitable for the purchasing of a life insurance policy depends on your long term goals, and what benefits you want to provide for your future beneficiaries. At Malhotra & Assoc Insurance, we work directly with you to determine which coverage best aligns with your long term goals to ensure that any beneficiaries (now or in the future) are taken care of.
Do I need to get an insurance policy for my aging parents?
While it’s totally possible to purchase life insurance for your aging parents, it’s important to consider the coverages that they have. In general, it’s a good idea to purchase life insurance for your aging parents if they currently do not have life insurance. Of course, this can only be done with their consent and permission. They may be interested in purchasing their own policy, so it’s important to loop your parents into this decision as well. In some cases, only final expense insurance is needed, and so understanding whether or not life insurance is truly needed in your parent’s unique cases is an important consideration to make as well.