If you’re married with children, then you probably know you should have life insurance to protect your dependents in the event of your death. But do single people without those same dependents also need to insure themselves? According to USAA Life Insurance, the number of single people buying life insurance has increased 10 percent compared to a year earlier. The biggest growth was among twenty-somethings, which experienced a 24 percent increase in life insurance purchases.
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The increase appears to be driven in part by the economy. During economic downturns, people across the board tend to buy less insurance, simply because they can’t afford it. In fact, life insurance ownership in general is at a fifty-year low right now, a dip that industry experts attribute to the economy. So part of the increase in life insurance purchases, which is happening across multiple demographic groups, can be attributed to the economic recovery following the most recent recession.
With singles, though, demographic shifts are also at play, says Greg Blake, executive director at USAA’s life insurance company. There are now more single households than married households, and people stay single longer. Single people are also more likely to experience major life events, which often lead to the purchase of life insurance, including having children and buying a home. There’s one more factor, too: Single people are often responsible for parents or grandparents, and they want to make sure those dependents will still be cared for.
“Some single people have parents who were hit really hard or have medical needs and can’t afford bills on their own, or they’re helping to support a special needs sibling. Having a life insurance policy will let that continue if they pass away,” says Blake.
Many twenty-somethings, says Blake, have learned a hard lesson from the recession. “A lot of millennials have seen their parents and grandparents struggling in retirement, and they’re taking a lot of steps to prepare for financial security and prevent those problems for themselves,” says Blake.
As for whether or not single people need life insurance, the answer is sometimes. For any single parent, the answer is probably yes, and anyone supporting other family members might want to consider it, too. Blake says that some young people decide to take out insurance just to ensure no one else has to deal with the funeral expenses or any debts, such as a mortgage.
Blake adds that buying life insurance as a single 25-year-old who plans to have children one day can be more affordable than waiting to purchase the insurance until that person is a 32-year-old father. That’s because rates tend to go up with age, and life insurance is pretty cheap for healthy young adults in their twenties. It can also become prohibitively expensive or even impossible to obtain if a major health problem crops up later.
As for how much life insurance to get, it’s hard to apply a standard formula to every situation. Financial planners tend to recommend one of two strategies: Make a list of all of the expenses you would like covered in the event of your death, from college tuition for children to paying off a mortgage, and take out insurance worth that amount. The other option is to take out enough insurance to replace your salary for a certain number of years, such as five to ten. Online calculators and qualified professionals can help finesse those numbers.
What do you think, do single people need life insurance?