Do You Need Life Insurance if You're Young and Single? Here's What Dave Ramsey Says
- Life insurance can protect your loved ones in the event of your passing.
- If there's no one in your life who'd get hurt financially if you weren't around, then you can probably hold off on life insurance.
You don't want to spend money on life insurance if it's not a necessary expense.
Putting a life insurance policy in place is one of the most important moves you can make to protect the people you care about. But what if the people you care about don't depend on you for any sort of financial support?
It's one thing to get life insurance if you have a spouse you share joint expenses with, like a mortgage, or if you have kids who rely on your income. But what if you're young and single? Do you need life insurance at that point?
While financial expert Dave Ramsey believes life insurance is an important thing to have, he also doesn't like to see people waste their money. And so he says that if you're young and single and have no one who depends on you financially, you can skip life insurance until your circumstances change. But if you're young and single and do have people who depend on you, that's a different story.
The downside of life insurance
The upside of life insurance? Financial protection for the people who matter to you. The downside? The cost involved.
Even if you purchase a term life insurance policy, which can be considerably cheaper than a whole life policy, you might still end up spending many hundreds of dollars a year on coverage. Meanwhile, if you're young, single, and loaded with debt -- whether from your studies or another reason -- then you may be better off using your money to chip away at loan balances, rather than paying for a life insurance policy.
But that assumes you have no one in your life who depends on you financially. Even if you're not married and don't have kids, there could still be people in your life who stand to get hurt financially in the event of your passing.
Imagine you're 25 years old and your parents are no longer living, so you do your best to help out your 18-year-old sibling who recently started college. You may not pay your sibling's rent or tuition. But do you throw them a few hundred dollars each month to pay for things like books and so they have a little extra spending money? If so, it could pay to get a small life insurance policy.
Similarly, imagine you're an only child and you help your aging parents with things like errands, housework, and home care. If you were to pass away, your parents would potentially need to bear the cost of a home health aide, which could be hefty. Leaving them some insurance money would no doubt ease that burden.
Think about your personal circumstances
It's easy to assume you don't need life insurance if you're young and single. And to be fair, even Ramsey agrees that most people in that situation can pass on life insurance and use their money for other purposes, like building savings, paying off debt, and shoring up their finances.
But it's important to consider your personal situation when deciding if life insurance pays. It may be the case that while you're young and single, there are people in your life who might struggle if you're gone.
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