No matter your age, starting to think about life insurance is essential. Life insurance policies allow you, your family, or any other dependents to prepare for your eventual passing. The payout can help those you love to live safely and comfortably after you’re gone. However, based on your age and situation, there may be several reasons not to buy life insurance.
Buying a life insurance policy makes more sense for some people than it does for others. Holding off and waiting until you’re older or simply never purchasing a life insurance policy could benefit you under certain circumstances. To help you make a decision, this article will discuss some situations where buying life insurance is not the best option. We’ll also look at some times when life insurance is beneficial and some alternative options.
In this article
1. You Don’t Have Dependents
One of the main reasons not to buy life insurance is that you don’t have any dependents. Dependents are typically family members such as children or a spouse who rely on you for income. Your dependents can use the insurance payout to pay bills, as an income replacement, or to cover any necessary expenses.
Without dependents, you may not need a life insurance policy. If you’re single, or have a spouse that supports themself, you might not have anyone who requires the financial assistance of a life insurance payout once you’ve passed. On the flipside, if you are in a joint venture with another person, have a history of health issues or even if you just simply want to cover your final expenses, purchasing life insurance even though you don’t have dependents may be something to consider.
2. You’re Young
At a young age, buying a life insurance policy isn’t always the best choice. Perhaps you graduated college with little to no debt or found a job early on in your life. If you were to pass away prematurely, your parents or other loved ones wouldn’t have to worry about covering mountains of student loans.
Additionally, you might not have a mortgage or other significant financial expenses that your family would need to cover once you’re gone. At a young age, you also may not have dependents to support financially with an insurance payout. However, you’ll never find better rates for your life insurance than when you are young. Locking in a rate in your twenties when you are young and healthy amounts to mere pennies a month.
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3. Life Insurance Policies May Be Too Expensive
No matter your age, life insurance policies that are too expensive are certainly difficult to consider, especially if the cost isn’t within your budget. Some insurance policies will suit you depending on your current financial situation and the insurance company you choose. Others will have monthly premiums that are simply too expensive for your income.
Finding the right insurance policy for you can be challenging. Before you buy a policy, be sure you have the financial means to pay the monthly premiums, even if they become more expensive over time. If you can’t, you may lose portions of your coverage or need a policy loan to pay other expenses. The idea that life insurance policies may be too expensive is a common one. Before making that definitive determination however, take a look at the different types of policies available to you. The cost differential between a term plan and a whole plan, may help you decide to invest after all.
4. You Have Little to No Debt
Another one of the most crucial reasons not to buy life insurance is because you have little to no debt. Even without dependents, someone with substantial student loans or credit card debt will likely want a life insurance policy to prevent their debt from transferring to their family. The life insurance payout could cover all or some of that person’s debt.
However, a person with little debt or who has enough in their savings to cover outstanding debt and other immediate expenses may not need life insurance. While not swimming debt is a blessing, and having a nest egg of emergency funds is commendable, there are a number of issues that can arise that may chip away slowly, or impact in a big way, your savings account. Over time, things like unexpected travel expenses, pet care expenses, job loss, home repairs and car repairs can slowly deplete your hard earned savings. For those reasons, and even if you simply want to cover your funeral costs, it may be wise to at least explore a life insurance policy.
Why You Might Need Life Insurance
Very simply, the reason you may need life insurance is to lessen the financial impact of your death for your loved ones. A life insurance policy will pay your beneficiary(ies), with a lump-sum payment that can be used for a variety of things that can at the very least, help them maintain the family home, and financial responsibilities. Let’s take a closer look.
You Have Dependents
One of the main reasons why people buy life insurance is to look after loved ones in the case of their untimely passing. If you have young children you claim as dependents, they likely won’t be able to provide for themselves and cover your expenses, such as a mortgage and car loan. Unless you have a spouse or family members who can care for your children and pay all necessary costs, you’ll need life insurance.
You Have Considerable Debt
Another main reason for buying a life insurance policy is to cover outstanding debt and ensure that your loved ones don’t pay it themselves. Passing significant debt to other people can leave them in difficult financial situations.
Whether single or married, you must ensure that you have enough savings to cover your outstanding debt. Otherwise, you’ll want to consider a life insurance policy to help your loved ones.
To Provide a Financial Cushion
Even if you have no dependents and little to no debt, you may still want to buy a life insurance policy. The insurance payout can help provide a financial cushion for your loved ones.
If you’re married, the money can help your spouse through an extremely difficult time. The payout can go to your kids or grandkids to help them pay for college. If you’re single, your family can use the insurance money to pay for your funeral and any outstanding expenses you leave behind.
Term vs. Permanent Life Insurance
If you’re still unsure whether purchasing a life insurance policy is right for you, you might want to consider a different type. The two main types of life insurance are term and permanent, and you may find that one is better for your situation.
Term Life Insurance
When you buy a term life insurance policy, you agree upon a set period in which the insurance company will cover you. The insurance company will pay out the policy benefits if you pass away during this time. Because they have a set timeline, term life insurance policies are typically less expensive than permanent policies.
If you’re at a more advanced age or only require life insurance while your children are your dependents, a term life insurance policy may be your best option. You’ll pay less and have coverage for the period you choose, usually up to 30 years. You can purchase another term life insurance policy if you require more coverage once your policy has expired.
Permanent Life Insurance
If you want a policy that lasts your entire lifetime, permanent life insurance is a better and cheaper option than buying consecutive-term policies. With a permanent life insurance policy, you pay monthly premiums that typically won’t increase in price. As long as you’ve paid the premiums, the insurance company will provide the payout if you pass, and the value of the policy may increase over time.
If you’re younger, want a lifetime insurance policy, and can afford it, permanent life insurance is likely the best choice. A permanent policy can cover your debt while you try to pay it off, ensure that your current or future spouse and children live comfortably after you pass, and provide a financial cushion for your loved ones.
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Comparing Life Insurance Policies
While some of these reasons not to buy life insurance may apply to you, understanding the prices of different policies can further help you make your decision. However, getting quotes from numerous insurance providers is exhausting. Luckily, you don’t have to.
Alliances Income Services Corporation (AIS) makes comparing life insurance policies from different providers quick and straightforward. We do the work for you, finding the best price on a policy or helping you realize that life insurance isn’t your best option.
Simply enter your basic information and tell us what you’re looking for in a life insurance policy. Then, we’ll show you the best prices and plans to assist you with your decision. Choose AIS and easily find Canada’s best life insurance policies.
