Do I need life insurance even if I'm single?
Buying life insurance can be like putting a duvet inside a duvet cover or having to pick up and move the vacuum cleaner when the pipe doesn’t reach: it’s not particularly unpleasant, but you never really feel like doing it. That makes sense; on some level life insurance is always going to be a bit of a grudge purchase. No-one really enjoys dwelling on their own death, especially when the product they’re buying doesn’t directly benefit them in any way. Life cover pays out a lump sum to your loved ones when you die so, unless you know something the rest of us don’t, you’re not going to get to spend any of that money.
It’s usually love that motivates one to take out life cover – love for one’s family, one’s partner, or one’s kids. Why most people don’t really think about life insurance until they buy a house, settle down with a spouse or life partner, or have children. There’s something in those major life events that opens the mind and heart to the understanding that you have a major responsibility to those you love. Whether you are the primary breadwinner or not, the loss of your life is going to have more than an emotional impact on those left behind – the financial implications can be severe. So, you take out life cover in order to provide for them, to make sure they don’t have to suddenly find extra income or pay a bond the day you pass on.
But what if you’re single? What if you don’t have that significant other whose name usually goes at the top of the life policy beneficiary list? Do you really still need life cover? Possibly not, but before you shake your head and move on, you should answer these questions:
Do you have children?
You may no longer be in a relationship with your child’s other parent, but that doesn’t change the impact that your loss could have on your kids. Your children can be personally named as beneficiaries on a life policy, ensuring their financial security in the event of your death. This is especially important if you are responsible for the bond that covers their home.
If you were to be disabled for some reason, is it possible you would lose your ability to earn an income?
Not all life insurance pays out when you pass away. Disability cover pays out when you are severely injured or disabled in a way that prevents you from earning an income. In such an event you will receive a cash lump sum that can be used to compensate for your loss of future earnings, protecting you and those you care for from financial disability too.
If you die, who pays for your funeral?
Whether you’re single or not, your life is connected to others’ – think family and close friends. If you die, who is going to cover the costs of your funeral and related administration? Funeral cover eliminates this concern by paying out shortly after your death to take care of funeral and other expenses. Funeral cover also allows the addition of extra lives (your spouse to the policy, which means that you can offer loved ones the gift of peace of mind, knowing that their funeral costs are also covered in the event of their deaths.
If you die or lose your income through injury, who pays your bond? If you are disabled in an accident and lose your access to income, defaulting on your home loan and losing your house also becomes a tragic but very real possibility. Disability insurance specifically guards against this danger. What if you die? Well, if the home loan provider has to recall the debt and repossess the house that may not affect you, but if your children or any other loved one lives in that house the impact on them could be drastic. One of life insurance’s key roles is to pay off major debt – your home loan is likely to be the largest debt you accrue in your life – so that loved ones left behind do not become responsible for it.
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