The best way to determine whether or not you need life insurance is to ask yourself one simple question: who depends on my income? If the answer is only you, life insurance may not be your biggest priority right now – and that’s okay! The primary purpose of life insurance is to allow your loved ones to maintain their financial lifestyle after you’re gone. If the loss of your income wouldn’t impact anyone else, then you don’t have to worry about that. Generally speaking, if you’re not married, you can save yourself a little money by foregoing life insurance for the time being. As with most things, however, there are a few exceptions.
If you have children . . .
Children are called our “dependents” for a reason. They depend on us for care, guidance, and resources. If you have a kiddo in your life that relies on your income to meet their needs, you need term life insurance. The age of your child(ren) plays a role in how long you’ll need coverage – ideally, until they graduate college – so keep that in mind when choosing your term length.
“Life insurance is to replace your income for someone who counts on it. That’s the main thing.“ – Dave Ramsey
If it’s offered by your employer . . .
When an employer provides life insurance at no cost, there’s really no reason not to take it. If you have dependents, however, your employer’s group plan may not be enough. Dave Ramsey recommends having 10 to 12 times your income in term life coverage, and no more that 50% of your life insurance through your employer, so be sure to supplement that with an individual policy if someone in your life does depend on your income.
If you’re drowning in debt . . .
Unfortunately, most of us have some debt in our lives. If you’re in the “single with student loans” category, purchasing a term life policy to cover your income while you’re paying those off is a smart move. We know – the thought of adding anything else into your budget while working on that debt snowball can be intimidating. The good news? It’s probably more affordable than you think, and the risk of leaving loved ones with your debts outweighs the benefit of saving a few dollars a month.