5 Reasons Non-Parents Should Have Life Insurance

Aaron Crowe | Children, Life Insurance | 11 Nov, 2014 | No Comments

Parents who die early leave one of the biggest life commitments behind — their children. They’re the best reason to buy life insurance by planning for their financial future in case a parent dies.

That’s the main benefit of buying life insurance when you’re young — insuring that the children you leave behind are taken care of. Life insurance isn’t for you, but for the people you leave behind. But children aren’t the only people who are left behind. You may have other dependents who rely on your income, even if you don’t have children.

As common as it is to buy life insurance when you have children, there are other times in life when it’s worth having. Here are five circumstances when non-parents should consider buying life insurance:

1. Married with a mortgage. If you have a non-working spouse who depends on your income to pay the mortgage, or even a working spouse to share the bills with, a life insurance policy for each of you can help ease the financial burden if one spouse dies.

2. Other dependents. You may not have children, but if you have parents, grandparents, or a sibling with special needs who either live with you or depend on you, then life insurance can be worth having to help take care of them if you die and they depend on your income.

Christopher Lalor, a life insurance broker, had a client who was 46, unmarried with no children, but needed life insurance because his sister, 58, was born with autism. She depended on him for financial support. The solution, Lalor says, was to have the client set up a trust and buy a life insurance policy that would fund the trust when he died. This way, his sister would have financial support if he died before her.

3. Indebted to someone. Sometimes your debts, such as college loans, have to repaid by a co-signer if you die.

“A classic example is a young adult that has borrowed money from their parents to pay for college, especially if mom and dad co-signed the loans,” says life insurance agent Jeff Rose.

The same is true for young people who have their parents co-sign for a car or business loan, says Ellen Edwards, owner of EM Insurance Services.

4. Funeral expenses. This isn’t a cost you’re obligated to pay, obviously, but you may want to consider if your parents or survivors have enough money to cover your funeral expenses. If you don’t want to leave the burden on them, a minimal life insurance policy can cover these costs.

The national median cost of a funeral in 2012 was $7,045, according to the National Funeral Directors Association. That doesn’t include cemetery, monument or marker costs, flowers, obituaries and crematory fees if cremation is selected. Add all of the costs and it could easily get to $9,000.

5. Supplement company insurance. If your employer gives you life insurance as part of a benefits package, chances are it’s a minimal amount. You’ll likely lose the coverage if you change jobs, or if you become sick and can no longer work.

If you can’t work any longer because you have a terminal illness, and therefore lose the life insurance provided by your company, it may be too late to qualify for a life insurance policy. This scenario can make buying a supplemental life insurance policy a good idea. Your family will have better coverage if you die while your employer’s policy is in effect, and you’ll have coverage if you get sick and can no longer work.

With these five reasons in mind, it’s worth considering buying life insurance, even if you aren’t the typical life insurance customer who has children.

Aaron Crowe is a freelance journalist who specializes in personal finance topics.

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