What insurance should a single person have? If you drive a car, you probably need car insurance. If you own a home, you probably need home insurance. And since you’ve got a life, the logic could follow that you need life insurance, right?
Potentially, although not all people need life insurance. Parents often buy it to protect their kids’ financial future, and partnered people might purchase it so their partner isn’t left in the lurch without their income. But if you’re single, you might not have as many concerns about the financial situation you’ll leave behind. That said, there are a few very compelling reasons to buy life insurance while single.
As a quick clarifier, when we’re talking about a single life policy here, we mean a policy for people without a partner or children. This is different from single-premium life insurance, which is life insurance that you pay with one upfront lump sum premium.
Now, back to the question at hand: does a single person need life insurance? That depends on you and your situation, so let’s dig into some determining factors.
Should a single person buy life insurance?
When people are married with kids, it’s pretty clear how their death benefit will be used. That money will go back into supporting their household, helping their immediate family transition to life without them — and their income.
But it’s different when you’re single. You might buy life insurance for a bunch of different reasons, and you have a lot more flexibility in how your single life policy death benefit gets used.
Specifically, though, why would a single person need life insurance? Let’s look at a few key reasons:
Funeral costs
Even if you don’t care much about what happens after you die, the odds are high that the people who love you do. Your loved ones will probably want to have some sort of funeral or remembrance service, and they’ll also want to make sure your body is laid to rest.
Yes, it’s morbid to think about. But it’s also helpful. Why? Funerals aren’t cheap. And if you don’t plan ahead, you could leave your loved ones dealing with losing you and the financial burden of your funeral and burial/cremation. Which, by the way, the National Funeral Directors’ Association (NFDA) says burial costs are roughly $7,600 on average.
That’s a pretty hefty sum, one you probably don’t want to leave the people in your life to cover. With a burial-focused life insurance policy, you won’t.
Locking in low rates
The younger you are, the cheaper your life insurance will be. When we compared rates using CompuLife, we found that 30-year-old male non-smokers paid between $170-$270 for a $500,000 permanent life insurance policy. By age 50, that same policy costs somewhere between $400-$600.
In other words, the longer you wait to buy life insurance, the more it’s going to cost. So, yes, you’ll want to weigh life insurance if single, but make sure you put cheapness in the pro column. If you think you’ll want to buy a policy later in life, it might make sense to do so now to lock in the lower rates that come with being younger.
Future health issues
Similarly, life insurance gets a lot pricier if you have health complications. So if you know that you have a family history of a chronic condition and you think you might be affected by it later in life, you may want to buy life insurance now, even if you’re single.
Life insurance gets a lot easier to find (and cheaper) when you’re in relatively good health. Wait until you’re dealing with a diagnosed condition, and you’ll have a harder time finding a policy because most require a medical exam, which includes a review of your doctor’s records. At that point, the pricing is assured to be considerably higher. (All this said, if you ever have trouble finding life insurance because of your family or personal medical history, we may be able to help with no-exam coverage.)
Debts
Do you need life insurance if you’re single? If you’ve got debts, you very well might. But it all depends on the type of debt you have. Insurance for single people makes sense when they have:
- Private student loans. While federal student loans will generally get discharged when you die, that’s not necessarily the case with private loans. What happens to the amount you still owe after you pass away varies from lender to lender, so it’s well worth digging into the details. If your family (e.g., your parents) would get passed your student loan debt, you may want to buy a single life policy to pay off what’s left of your student loans and protect them from that financial burden.
- A mortgage. If you still owe money to your home lender when you die, they can foreclose on your house to recoup what they’re owed. If you live alone and don’t particularly care what happens to the house at that point, then no worries. But if you want to make sure the money you’ve paid toward your mortgage so far gets passed on as equity to someone you love, you need to make sure they have a way to keep up with any remaining mortgage payments. And the death benefit from life insurance for single people can do precisely that.
- A car loan. Just like a mortgage, an auto loan is a type of secured debt. That means that if you don’t make good on what you owe the lender, they can take possession of the collateral for the loan. In the case of the mortgage, that’s the house. With a car loan, the collateral is your car. If you hope to leave your vehicle to someone after you’re gone, buying a small life insurance policy can satisfy whatever’s outstanding on your auto loan. That way, the person you want can get your keys.
- Credit card debt. In some cases, your family members could get stuck with your credit card balances after you pass away. The way credit card debt gets handled is a little complex, but it pays to think through your specific situation. This US News article on the topic can help you better understand what to expect here.
- Any co-signed debt. Maybe your parents cosigned on your car loan or your business partner cosigned on a business loan with you. Whatever the case may be, if you are a business owner or have someone that has been willing to get into financial bed with you, it’s courteous to consider how they would manage your shared debt after you pass away. With a single life policy, you can make sure your cosigners aren’t stuck with a difficult financial burden that can be avoided with the cash payout of your policy.
Legacy building
Does a single person need life insurance? Unless one of those above cases seemed particularly relevant to you, the answer might be no. But there could still be cases when you want life insurance.
With a single life policy, you leave behind a chunk of money when you die. And that money could be used to make a meaningful donation to a charitable cause you care about, or to set up a scholarship fund. In other words, it gives you a way to leave a legacy behind.
How much life insurance do I need if I’m single?
If you’ve decided you want to get a single life policy, you need to figure out three things: what policy type to choose, how much to get, and who to buy it from.
As far as policy type, the main categories are term life insurance and permanent life insurance. Term life insurance expires after a set amount of time (like 20 or 30 years), but costs a lot less than permanent coverage, which lasts your lifetime.
Be sure to check our guide on understanding the differences between term and whole life insurance.
From there, you need to decide on the right death benefit size. Let’s look at some common considerations when it comes to life insurance for single people, based off the situations we discussed earlier:
| Situation | Rough death benefit size | Things to consider |
|---|---|---|
| Funeral costs | $10,000 | Cremation is cheaper than a burial but, either way, getting a slightly larger death benefit will leave your loved ones with a little cushion. |
| Locking in low rates | $200,000 - $1 million | It’s hard to predict how much coverage you’ll want later in life. Compare quotes for different death benefits to figure out what best fits your budget now. |
| Future health issues | $200,000 - $1 million | Same as above. |
| Debts | The size of your debt. | For debt, a term life policy can be particularly helpful. If you have a 30-year mortgage, for example, a 30-year term policy can step in while that financial burden is in play. |
| Legacy building | The size of your goals. | Your current income level will likely play a role in how much death benefit you can get and, consequently, the size of the donation, endowment, scholarship, etc. you leave behind. |
For help determining the right amount of life insurance for single people (and all people), we recommend this guide from the Insurance Information Institute.
If you want help finding the best insurance for a single person, we’re here. Our team at Sproutt can help you shop options and pinpoint the right insurance for your needs. We can even help you find life insurance that rewards your lifestyle choices.
