He’s young, single, career driven and no children. He walks into my office on referral from a friend and while he has definitely accumulated savings, he thinks he doesn’t need insurance and wonders why anyone in his position ever would.
A common misconception is that the above mentioned client would not, in fact, need life insurance at all. Why would he? If something were to happen to him, nobody would suffer financially, right? Wrong.
In general, you buy life insurance for one of two groups of people – those that you love, and those that you owe. In general, the proceeds of life insurance should be used to pay off debts and leave a lump sum in the hands of your loved ones, so they are not too financially burdened after your passing.
What if there are no “loved ones”? No wife, no kids? No financially dependent parents or family members? Please keep in mind that despite youthful bravado or commitment to remaining a bachelor (Trust me, I’m right there with you!), life likely won’t always look like this. Some young suitor may sweep you off your feet and there may subsequently be juniors running around before you know it. The younger you are when you purchase insurance, the less costly it will be and higher are the chances of being approved. An insurance approval at a young age guarantees you the ability to continue the policy for your lifetime depending on the setup of the policy you buy.
Do you have any debts, with or without a co-signor (i.e. you own a company with a partner, or you’ve co-signed on a loan for your sister). Would the survivor be able to cover the debt and pay out your share of the asset to your estate? Unless you have sizable assets to cover any debts, a life insurance policy may be a good way to avoid having to do a fire sale of assets on death of a partner.
Lastly you may want to purchase insurance to leave a legacy, a concept which many clients don’t often think about but the forethought is worth it. Clients concerns are usually first and foremost taking care of their families and debts, as opposed to leaving a legacy behind. As we reviewed earlier, life likely won’t always look like this. Children will grow, debts will be paid off, people will move on. Life insurance proceeds are not so direly needed by spouses and children, and policy holders may choose to leave the proceeds to a cause that is near and dear to their hearts.
Dear young, single client with a career and no children, there are many life insurance questions you should ask yourself that go beyond the pages of this blog. Consider sitting down with a qualified financial professional to help in your decision making. Here’s to a good financial future!
