Does It Ever Make Sense to Skip Life Insurance if You Have Dependents?

Skipping coverage could have serious consequences, so is it ever a good idea?

Life insurance is extremely important for anyone who has people depending on them. Whether loved ones need the money that the policyholder earns or the services they provide, coverage can help ensure that those who are left behind are provided for and not left in the lurch when an untimely death occurs.

Of course, there is a cost to buying life insurance, so those with dependents may wonder if there's ever a situation where it makes sense to skip getting covered. For most people, the answer is no, but there is one exception.

Here's when it may make sense to go without life insurance

The only time it makes sense for someone with dependents to go without life insurance is if there would be no need for surviving loved ones to receive any money after a death occurs.

This could happen if someone was independently wealthy and had plenty of money to cover all of the costs surviving family members would face. For example, a person who had no large debts, and who had diligently saved money and had a substantial sum in their bank account might not need life insurance.

In this case, if the individual passed, surviving family members could use the money in the bank accounts to help cover any costs the deceased would have helped pay for as well as pay funeral expenses. 

Most people need to get covered to protect their families 

Many people eventually get to the point where they do not need life insurance anymore. For example, an older retired person with a healthy savings account wouldn't necessarily need coverage even if he had a wife who he was helping support. 

In fact, this is why term life insurance is a good choice for most people. Term life insurance remains in effect while a policy is needed, and the coverage generally ends after a substantial number of years once someone no longer has loved ones relying on their income or services. 

But, this doesn't happen for a long time for the vast majority of people, as those early in their lives or in the middle of their lives usually do not have enough wealth amassed to replace their income and cover everything their survivors might need.

For those who don't have a lot of wealth, it's important to get life insurance coverage sufficient to replace their income for as long as it is needed; to repay debt in full; to cover mortgage costs; and to pay for the education of any surviving children.  

Those who have a lot of wealth may also want coverage as well, because life insurance could potentially help pay estate or inheritance taxes so other assets do not have to be sold to cover those costs.

Ultimately, every individual should carefully think about what their dependents or loved ones would need after they are gone. If there is any chance money would be required, getting life insurance could provide crucial help to surviving family members. It's always better to have a policy that turns out not to be needed rather than to need a policy and not have one, so consumers should err on the side of caution unless they are sure their savings is sufficient to meet all their dependents' needs.