Do I still need life insurance if I'm single?
While you may think that the answer is an abrupt no, it is not always the simple. While many young may not have any dependants to look after, there are other financial commitments and future obligations which can make life insurance worth considering.
Consider these financial commitments and future obligations
Here's why life insurance may be a reasonable consideration:
1. Kids and dependents
While single people are generally grouped in peoples' minds under this umbrella of unencumbered freedom, single people can have dependants. As of June 2012, there were 961 thousand single parent families, making up 15% of all families. Roughly 67% of these single parent families had dependants living with them.
2. Funeral expenses
It may be a morbid train of thought, but making sure your final expenses are taken care of is something worth considering. The last thing you want to do is leave your surviving family members to deal with both emotional and financial grief at the time of your passing. If you don't have life cover with funeral insurance, one of your relatives may end up footing the bill. Even a basic funeral can be expensive with the average funeral costing anywhere from $4000 for a basic cremation to around $14,000 for a more elaborate ceremony.
Costs associated with funerals include:
- Burial or cremation
- Celebrant or clergy
- Cemetery plot
- Death certificate
- Funeral director fees
- Newspaper notices
- Other expenses
- The wake
3. Outstanding debts
Are you in control of your finances or are you buried in debt? Do you own property with a family member? If you were to pass-away, you'd be more than likely leaving your family member with a sizeable repayment because of your missing contribution. Would they be able to continue making payments or would they have to give up on the investment? If you planned ahead and look out a life insurance policy naming them as your beneficiary, you could leave them enough funds to cover your share of the mortgage, or perhaps to pay off the entire debt.
4. Future changes to health
While you may already have health insurance, that doesn't provide you cover for any of the ancillary costs associated with getting sick. What would happen if you had to take an extended period off work? What if you sustained a life changing injury that meant you could never work again? While there are government benefits available, these only provide the bare minimum of cover. Having a life insurance policy in place can make sure you are able to continuing living YOUR life. Singles can choose to take out various levels of life insurance. Some life insurance policies cover as standard income protection, TPD and trauma insurance.
Income protection is a simple and effective way to protect your finances when you are unable to work for a period of time due to sickness or injury. Income protection provides a monthly benefit of 75% of your salary for generally a maximum of two years.
TPD (Total Permanent Disability) insurance provides you with a lump sum should you no longer be able to work due to a life changing circumstance. You can choose from 'any occupation' or 'own occupation' policies and many policies also provide a death benefit.
Trauma insurance provides a lump sum benefit if you suffer a defined traumatic event. The policy is designed to help you deal with the immediate financial impacts that stem from suffering one of these traumatic events.