Does a Single Person Really Need Life Insurance?

What is life insurance?

A life insurance plan is a financial tool that helps you protect your family’s life goals and secure their future financially. It is simply a contract between a life insurance provider and the insured person, and it is valid for a specific period known as the policy term. In case the insured person passes away during this policy term, death benefits are paid out to their nominees.

However, in case the insured person survives this term, maturity benefits are paid out to them under all kinds of life insurance plans except term plans.

 

Do you really need life cover if you are single?

As you’ve seen from the details of the answer to ‘what is life insurance,’ a life cover is primarily beneficial because it helps you secure your family financially in your absence. So, what happens if you are single? Do you still need a life insurance cover? As it turns out, having a life cover in place is also beneficial to single people in many ways.

Here is why you really need a life cover even if you are single

 

1. It takes care of your dependent parents

Even if you are not married, you may have dependent parents. In case something untoward happens, they need some kind of financial security to fall back on. A life cover can offer you and your parents this kind of financial safety net.

 

2. It covers your debts

You may also have many debts at this age, like an education loan that you may have taken for your college expenses, or a home loan taken for buying your first house. In addition to this, you may also have personal loans. A life insurance policy ensures that in your absence, your parents are not burdened by these debts.

 

3. It can help you create wealth

Life insurance can also help create wealth through investments. Specifically, products like Unit Linked Insurance Plans (ULIPs) help you invest in equity funds, debt funds or a mix of both. This opens up the possibility of earning market-linked returns.

 

4. You can lock in low premium rates

Waiting to buy life insurance till you get married or have a child is not a good idea. By that time, you will be older, and your premium rates will also correspondingly increase. Instead, if you buy life insurance when you are single, at a younger age, you can lock in low premium rates.

 

5. You can buy coverage for your future family

You may be single now, but at a later point in life, you may get married and have a family of your own. Buying life cover today can help you have a security blanket in place for your future family.

 

How Much Life Insurance Coverage Should a Single Person Take?

When buying a life insurance policy, it is recommended to opt for an adequate sum assured so that it can help you fulfil your financial goals. When choosing the sum assured, it’s important to assess these factors –

• Your lifestyle expenses and income
• Existing assets and liabilities
• Number of dependents
• Financial goals

Considering these factors, you can find the sum assured which would be enough to cover your family’s lifestyle needs and financial goals in your absence. A basic thumb rule is to choose 10-12 times your annual income as the sum assured. However, this rule is quite basic and does not factor in your current and future financial needs.

You can use a life insurance calculator to find the right coverage level and then buy a suitable plan.

 

Which type of life insurance should you opt for?

Now that you are aware of the many benefits of life insurance for single people, you may be unsure of which type of life cover to opt for. There are different types of life insurance available, and each have their own unique benefits. Check out these benefits below and pick the kind of life cover that will work best for you.

 

• Term insurance

Term insurance is a pure life cover that offers only death benefits. It is also one of the simplest and most affordable kind of life insurance.

 

• Endowment plans

Endowment plans or savings plans combine the dual advantage of savings and insurance under one policy, thus making it easier to meet your life goals.

 

• Unit Linked Insurance Plans (ULIPs)

ULIPs help you enjoy the dual benefits of insurance and investments. You can invest in equity funds, debt funds or a mix of both to create market linked wealth over the long term.

 

• Whole life insurance

If you want to ensure that your life cover lasts throughout your life, whole life insurance plans can help you out. The cover they offer generally lasts till you attain the age of 99 or 100.

 

Key takeaways

• It is feasible to buy a life insurance policy even when you are single so that you can prepare for life’s uncertainties in advance.
• Some life insurance plans can also help you plan and create a corpus for your financial goals, like buying a home, retirement planning, etc.
• When buying life insurance, assess your financial needs and then choose an optimal sum assured.
• There are different types of plans that you can buy like term insurance, endowment plans, ULIPs, whole life plans, etc.
• Choose a plan that matches your financial needs and helps in fulfilling your goals.

 

Conclusion

If you are wondering, ‘Should I get life insurance if I have no dependents?’, worry no more. Even if you are single now, the benefits of life insurance are many and varied, and you can always enjoy the advantage that a life cover offers. Understand the meaning of life insurance and how to buy life insurance for financial security.

Do keep in mind that if you buy a life cover when you are single, you need to account for all your future goals too. And that may include having your own family later in life. So, if that is one of your goals, make sure that your life insurance policy is enough to cover those financial needs too.

 

FAQs

 

1. Is life insurance necessary for an unmarried person?

An unmarried person can also have dependents and financial goals. A life insurance plan can help them create a financial corpus for their dependents in their absence. Moreover, if they choose a savings-oriented life insurance policy, they can also create a corpus for their financial goals.

 

2. What type of life insurance is best for singles?

The type of life insurance depends on your financial needs. If you have dependents and want to secure their finances, you can choose term insurance plans. If you want to save for your financial goals, you can choose endowment, money-back plans. If you want life cover along with the potential of wealth creation you can choose ULIPs. If you want retirement plans, you can choose life insurance annuity plans. So, the type of policy would depend on your financial needs.

 

3. Can life insurance help with tax savings?

Yes, there are life insurance tax benefits  on the premiums paid under Section 80C. Moreover, the policy benefits like maturity benefit are also tax-free, subject to specific terms and conditions.

 

4. What happens if I buy a life insurance policy now and later get married?

Getting married would not affect your life insurance policy. You can buy a life insurance policy now and get married without getting the coverage affected.

 

5. What is the ideal coverage life insurance amount for a single individual?

The ideal coverage in a life insurance policy depends on your financial goals, income and expenses, number of dependents, etc. You can use a life insurance calculator to find the coverage level suitable for your needs.

 

Sources

1.https://economictimes.indiatimes.com/wealth/insure/how-much-life-insurance-do-you-really-need/articleshow/22065416.cms?from=mdr