First and foremost, life insurance is used to protect those who are financially dependent on you.
Do you need life insurance? Well, ask yourself the question: do you have anyone financially dependent on you? This can include your partner, your kids, or aging parents (but not your shoe collection or video game avatar). If you have a loved one who relies on your income to maintain their standard of living, we recommend that you get life insurance. Why?
Let’s say, for example, that you and your partner recently bought a house. You borrowed money to pay for the house and now owe monthly payments on your mortgage. When you purchased your mortgage, you probably assumed that both of you would contribute to these mortgage payments. So without you in the picture, your partner may need to make a lot of sacrifices to make these payments. And in the worst-case scenario, he or she could even lose the house. Life insurance is there to make sure this doesn’t happen.
Who doesn't need life insurance?
In general, if you’re single and don’t have any children, you probably don’t need life insurance. Why? Because no one is relying on your income to live.
That seems simple enough, but here’s what you may be thinking: “I'm planning to have a family one day. What if my health deteriorates before then? Should I buy life insurance now before it gets too expensive or I get sick and become uninsurable?"
In this case, do you need life insurance? Buying coverage before you actually need it may seem like the best way to plan for the future (and to stop your mind from running through worst-case scenarios at 3:00 a.m.). But the reality is that if you don’t need the coverage today, the money you would spend on insurance premiums could be better used to contribute to retirement savings or build an emergency fund. If you’re someone who avoids risk at all costs, you may disagree with us. However, for most people, our advice is this: save your money for now, and come back to us in a few years when you’re married or have children. In other words, there’s no need to put the cart before the horse.
Additionally, anyone who is no longer making an income (usually those in retirement) or anyone with enough savings to cover their future family expenses doesn't need life insurance. Remember, life insurance is used to protect those who are financially dependent on you. If you can do that already with your savings, then life insurance is not needed.
How much does life insurance cost?
What does life insurance cost? Most people think life insurance costs 3x or 4x more than it actually does. And we don’t blame them. After all, life insurance costs are a bit of a black box.
Do you need life insurance?
At PolicyMe, we’re here to help with this. In just 5 minutes, you can build your customized plan and see how much it will cost. And that’s not all. We’ll also help you compare prices from all the insurers you know. Much simpler, right?