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I Have No Dependents - Do I Need Life Insurance?

by Dan Poole Last updated on May 15, 2017 Tags: Insurance

Image by: Patrick Tomasso 

When people contact us looking for life insurance, and we ask them why they feel they need it, the most common answer is “to provide enough money to look after my spouse and kids if I die too soon.”

Indeed, income replacement, children’s education funds, and paying off debts are the most common reasons families buy life insurance. But what if you have no dependents? Do you still need life insurance?

The answer is yes. Here are some reasons why.

1. Funerals are expensive

Even if you want to have a simple funeral, costs can run between $5000 and $15,000. You should plan on having enough cash on hand for your surviving family to pay those expenses.

2. Death and taxes

These are often regarded as the only two certainties in life. When you die, the executor of your estate (no matter how modest it may be) will have to file a terminal tax return, or final return. It is on this return that any taxes you owe will be paid to the government. You may have a tax bill if:

  • you have earned income from any investments
  • you have assets that are liquidated at a capital gain
  • you have any unpaid taxes owing from income you may have received before you died

3. Pay off your debts

Are you single and loving life in your downtown condo? That’s great! Do you have a mortgage? Most people do, and the bank will want it paid off when you die. No, they won’t be happy taking your condo instead; they would prefer to take the money and let your executor deal with selling the condo. Having adequate coverage to pay off all your debts is not only responsible, it may be required by your lending institutions. But remember not to buy mortgage life insurance from a lender! Here is why.

4. Estate and executor fees

If you don’t appoint an executor or legal representative to handle your affairs when you’re deceased, the courts will appoint one for you. The executor has a right to be reimbursed for the time and expenses they will incur to handle the resolution of your estate.

5. Leave a legacy

Do you want your niece or nephew to have something to remember you by? You can leave your life insurance proceeds to them in your will (you can create one at a discounted rate here). Or, is there a charity that you always wished you could support but couldn’t seem to find the money to make a meaningful donation? Consider allocating a small portion of your life insurance proceeds to that charity. No matter how small you may think it is, the charity will be appreciative.

Even young, single people with no dependents have basic insurance needs. These needs might be covered by a group insurance plan you have at work; check to see if they are. If you’re not sure how much insurance you need, speak to an advisor, or try our new online insurance needs analysis here.

Remember, your needs will change. Life insurance only gets more expensive the longer you wait to buy it. To start, think about buying a small amount with a short duration (perhaps a 10-year term) that can be increased or renewed later when you have a greater need.

While sorting out your life insurance coverage might be something you’d rather put off, you’ll feel a lot better for having done it! To make it easier on you, click here for an easy way to find the best policy for you at the best price.

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