How important is Life Insurance if I don’t have children?

Despite some common misconceptions, life insurance isn’t just for those who are married with children. If you’re single, you can benefit from it, too, because being unmarried doesn’t necessarily mean being alone: In all likelihood, your death would have a financial impact on others.

Young, single people are generally healthy and likely not concerned about the risk of an untimely death. They simply don’t consider that there is a need, and in a fact, a long-term benefit, to considering how life insurance fits into their financial security planning early on.

Life insurance for a single person doesn’t always make sense but sometimes it’s a perfect fit. Who needs it, and how much, for the most part comes down to the your long-term goals.

For starters, consider your end of life expenses. Who is going to pick up the remaining tab for your debts, mortgage, funeral, car and other responsibilities?

Next, ponder your legacy. Life insurance can be a great way to leave a tax-free legacy to nieces, nephews or anyone else. That list also includes your favorite charity. You could buy a single policy that would pay a lump sum to the organization or have the policy paid to a trust and create an income stream for as long as you desired.

Another point to ponder is that life insurance purchased today can protect your future insurability. When you’re young and healthy, not only is life insurance cheaper, but getting a policy early in life eliminates the risk that later health issues will make you uninsurable, or saddle you with high premiums. You’re also not likely to be single forever: Buy a policy now, and you can just build on your existing coverage once you’re married, instead of starting from scratch when you’re older and initiating coverage will be more expensive.

If all this talk is starting to make you think that life insurance might be for you, investigate. Generally, term life insurance covers you for a specified period, determined by you. Whole life (also called cash value or permanent insurance) covers you your entire life, has a savings component, and you can borrow from the policy. That could come in handy!

“I bought my first cash-value life insurance policy almost 20 years ago,” says Pamela Yellen, author of Bank on Yourself: The Life-Changing Secret to Growing and Protecting Your Financial Future. “I was reluctant to buy it since I was single and had no children, but it made sense after an insurance agent explained the guaranteed savings component and ability to access cash whenever I want. It turned out to be the best financial decision I ever made, and the policy has beaten my stock and real estate investments handily — without the sleepless nights.”

While you don’t want to pass up free coverage offered by your employer, supplementing that with a policy on your own is often a good idea. You’ll want to choose an insurer that has financial moxie. Pick a company with top financial strength ratings that has demonstrated stability over time.

How much will all this coverage cost? The factors that determine your premium include:

• Your health (naturally, the healthiest people pay the lowest rates)
• Smoking (it adds 30% to 40% to a policy’s cost — good financial incentive to quit!)
• Family history
• Age (the younger you are when you open a policy, the better)
• Your state
• Your gender (women pay less than men)
• Your occupation or hobbies (risky ones may lead to higher premiums)

Whatever you do, take action. Life insurance is at the foundation of the financial planning pyramid. Bad things happen. And when they do, life insurance is there for you.