People frequently ask us, as high-risk life insurance brokers, if they should purchase life insurance if they don’t have children yet.
It is not a matter of if you need life insurance (you do), but how to structure your life insurance plan.
Should I buy life insurance if I have no dependents? Yes, you should buy life insurance if you have no dependents for life insurance’s living benefits, cash-value life insurance, and to protect debts if you pass.
The best life insurance companies if you have no dependents usually have dual uses if you can use while you’re alive, such as living benefits for critical and chronic illness or cash value.
Asking questions like this is common.
We understand that life insurance isn’t black and white and can have many common questions arise.
With life insurance rates at historic lows, there is really no excuse not to have life insurance these days.
See for yourself how affordable term life insurance is.
Use our free rate comparison tool to shop the rates of the best life insurance companies in the United States.
Our article today will cover the top three reasons that people buy life insurance with no dependents.
Feel free to skip ahead to a section that interests you:
Life Insurance with Living Benefits
Life insurance with living benefits is a modern new feature where you don’t need to die in order to get cash from your policy.
Life insurance with living benefits has built-in riders for critical illness and chronic illness that benefit you directly, not your beneficiaries.
Therefore, life insurance with living benefits makes sense even for single people with no dependents.
These riders will advance a portion of the death benefit while you are alive if you get a hard-hitting critical or chronic condition.
Critical illnesses, like cancer, can take time and money to beat.
What life insurance with living benefits does is provide you and your loved ones with a lump-sum of cash when you need it the most.
If you survive your critical and chronic illness, you can keep the money!
If you die, the life insurance company will pay out the remainder of your death benefit to your loved ones.
Mortgage Protection Life Insurance
You don’t need dependents to need mortgage protection life insurance.
Living in a dual-income home is a necessity, not a luxury these days.
If your partner dies your income cannot support your mortgage payments, then you need life insurance regardless of if you have dependents or not.
Even if you are living alone, mortgage protection life insurance still makes sense because someone will inherit your home.
It takes time to settle an estate.
Probating a will can be an expensive and time-consuming process.
What mortgage protection life insurance does is gives your next of kin the resources to make a prudent decision instead of a hurried decision due to mounting bills.
Additionally, many of the best mortgage protection insurance companies include living benefits for critical illness and chronic illness in their policies.
These living benefits can provide you with an injection of cash to keep your mortgage paid while you’re recovering from a severe critical illness or chronic illness.
Also, many mortgage protection life insurance policies have a term conversion option built into the policy.
A term conversion allows you to exchange your temporary term life insurance with a lifetime policy.
If your needs change in the future; for example, you have dependents, converting your term policy gives you great flexibility in the event you’re uninsurable.
Cash-Value Life Insurance
Cash-value life insurance is another reason to buy life insurance if you have no dependents.
Cash-value life insurance is insurance first but is also an asset on your balance sheet that has value.
With cash-value life insurance, the cash value grows in a tax-deferred savings account that you can tap into via tax-advantaged loans.
If you take a loan from your life insurance policy, it is secured by the death benefit, which means that you don’t have to pay it back until you die.
While the cash value offers you great flexibility, the death benefit is useful as well.
The death benefit can be used to protect you for a number of reasons, such as repaying student loans.
As your insurance needs change, you can repurpose your cash-value life insurance to protect dependents down the road.
However, by locking in your cash-value life insurance early, you guarantee that you’ll have life insurance death benefits if you have dependents in the future at an affordable rate.
Whole Life Insurance versus Indexed Universal Life for Cash Value
The two most common forms of cash-value life insurance are whole life and indexed universal life.
Whole life insurance comes with the most guarantees in a life insurance policy.
Whole life guarantees cash accumulations, death benefits, and lifetime premiums.
Some whole life policies receive company dividends, which can be reinvested into the policy as paid-up additions.
These dividend-paying whole life policies are known as participating in whole life.
Indexed universal life is more flexible.
Indexed universal life will allow you to pick select your monthly premium.
A portion of your premium will go into the cash account and is invested in an indexing strategy that tracks an investment index.
If the index goes up, you usually will get interested credited up to a cap, and if the index goes down you will get 0 interest credited, but no lose principal.
A critical thing to remember about indexed universal life insurance is that your cash value is not directly invested in the markets.
Cash-value life insurance policies often include living benefits for critical illness and chronic illness as well.
Not only do you have access to the cash value, but if you get a critical or chronic illness, you can access the death benefits too.
Final Thoughts on Buying Life Insurance if You Have no Dependents
Most people think that they don’t need to buy life insurance if you have no dependents, but this is not true.
There are plenty of reasons to own life insurance, such as mortgage protection, regardless of if you have dependents or not.
Additionally, life insurance companies are increasingly adding living benefits for critical illness and chronic illness that provide cash payouts to you if you get sick with a covered condition.
Finally, if you purchase a permanent policy while you are young, you lock-in lifetime coverage that can grow with you as your insurance needs change.
Since these policies have a savings component to them, you can access your cash value while you’re alive if you need cash in a pinch through tax-advantaged loans.
If you no longer need the coverage, you can surrender it and take the cash value.
Also, life insurance is more affordable now than it has ever been.
Use our free rate tool to compare the rates of best life insurance companies in the United States today.