Author Topic: Do I need term insurance if I have no dependents now?  (Read 5653 times)

acorn

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Do I need term insurance if I have no dependents now?
« on: February 24, 2015, 01:50:47 AM »
I am single, 27, and currently have no plans to have children in the future. My income supports me, and my parents and brother are financially self-sufficient and do not expect me to support them. Should I look into getting term insurance now? Or is it better to get term insurance only if and when I intend to start a family?

I'm shopping around for insurance plans and the premiums seem very affordable. Even if I end up not having kids, it seems like a good idea to get term insurance so my parents and brother will get a sum of money if they outlive me. I'll eventually do the price comparisons across different companies, but my question is if it's necessary to get term insurance right now.

To all the single mustachians with no dependents, do you have term insurance?

lhamo

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Re: Do I need term insurance if I have no dependents now?
« Reply #1 on: February 24, 2015, 01:57:43 AM »
Life insurance is primarily to make sure that your dependents do not suffer after your demise.  In your case, it is not necessary.  Kind of like buying lottery tickets for your family, in a morbid kind of way. 

Not that there is anything wrong with that -- I have actually considered taking out a secondary life insurance policy (I have some coverage through work) just as a backup "here is some more money so you really don't have to worry about things financially and can just go hang out on a beach in Thailand until you find a nice girl who will take care of you and the kids" kind of thing for my DH.  He doesn't need it but if I died from cancer or got hit by a bus or something it would be nice for him not to have to worry about the financial aspect of things AT ALL.  I mean, he doesn't have to worry now, but he would have to think about finances a bit and figure out long term asset allocations stuff, etc.  An extra $500k would be a nice extra cushion.




Monkey Uncle

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Re: Do I need term insurance if I have no dependents now?
« Reply #2 on: February 24, 2015, 04:35:19 AM »
There is no point in paying life insurance premiums if you are not supporting anyone.  Period.  The premiums will still be pretty low by the time you get around to having kids.

Cheddar Stacker

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Re: Do I need term insurance if I have no dependents now?
« Reply #3 on: February 24, 2015, 05:40:19 AM »
There is no point in paying life insurance premiums if you are not supporting anyone.  Period.  The premiums will still be pretty low by the time you get around to having kids.

+1. And your word choices of need and necessary are really throwing me off. It makes me think someone is selling you something.

Premium affordability is irrelevant. An elephant for a dime is only a good deal if you need an elephant and have a dime. You don't need the elephant. Walk away.

KD

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Re: Do I need term insurance if I have no dependents now?
« Reply #4 on: February 24, 2015, 05:51:10 AM »
This seems to be not necessary, unless you want to save your extended family the expense of your burial and funeral.  If you want to make sure to have that expense covered for them, then I'd get a very small inexpensive policy with enough funds to get that covered.  Otherwise No.

DK

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Re: Do I need term insurance if I have no dependents now?
« Reply #5 on: February 24, 2015, 06:01:49 AM »
If you are not supporting anyone now when you are alive, you do not need to support anyone later when you are dead.

kpd905

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Re: Do I need term insurance if I have no dependents now?
« Reply #6 on: February 24, 2015, 06:08:27 AM »
Insurance is to make up for your lost income when you die.  If nobody is depending on your income, then you don't need it.

Emilyngh

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Re: Do I need term insurance if I have no dependents now?
« Reply #7 on: February 24, 2015, 06:16:22 AM »
Even if I end up not having kids, it seems like a good idea to get term insurance so my parents and brother will get a sum of money if they outlive me.

Why?   Are they completely financially dependent on you?   If not, why not just take whatever you'd spend on insurance, invest it, and leave that for them if you died?

I have term insurance because I have a spouse and child who are completely financially dependent on me.   However, my spouse does not because I am not financially dependent on him.   Term insurance only makes sense if in the minimal amount required to make up for covering any income loss that would be otherwise required to support your household.   

I'm a red panda

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Re: Do I need term insurance if I have no dependents now?
« Reply #8 on: February 24, 2015, 07:13:02 AM »
This seems to be not necessary, unless you want to save your extended family the expense of your burial and funeral.  If you want to make sure to have that expense covered for them, then I'd get a very small inexpensive policy with enough funds to get that covered.  Otherwise No.

I'd think that someone who is even slightly mustachian should have an estate with enough value to pay for their funeral costs.

begood

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Re: Do I need term insurance if I have no dependents now?
« Reply #9 on: February 24, 2015, 07:27:27 AM »
Even though I haven't worked full time for a couple of decades now, I still have a term life-insurance policy. The reasoning was if I died, my husband would have to outsource child care and some other expenses. So my small policy was to help make sure those things weren't a financial burden.

As our daughter heads into teenagedom, we may revisit whether I still need a policy. We're in a community that would help provide support, if necessary, when my husband needed it.

nobody123

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Re: Do I need term insurance if I have no dependents now?
« Reply #10 on: February 24, 2015, 07:44:38 AM »
If you are not supporting anyone now when you are alive, you do not need to support anyone later when you are dead.

I have a coworker who just added some additional term insurance for himself for his college-age daughter.  She has chosen to go into a lower-paid career (teaching), and he wants to set her up with some "generational wealth" if he passes away before his estate is "big enough" to do that.  It's important to him that she have the resources to stick to a lower-paid career that she finds rewarding, and that his future grandchildren have the money to go to college.  It's sort of hedging his bets a little.  Sure, he could invest the amount of the premium to help reach his estate goal faster, but what happens if he gets hit by a bus tomorrow?

I'm a red panda

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Re: Do I need term insurance if I have no dependents now?
« Reply #11 on: February 24, 2015, 07:49:05 AM »
Even though I haven't worked full time for a couple of decades now, I still have a term life-insurance policy. The reasoning was if I died, my husband would have to outsource child care and some other expenses. So my small policy was to help make sure those things weren't a financial burden.

As our daughter heads into teenagedom, we may revisit whether I still need a policy. We're in a community that would help provide support, if necessary, when my husband needed it.

This seems to be a pretty different situation than a single 27 year old.   Your family does rely on you for support, even if you don't work full time.

begood

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Re: Do I need term insurance if I have no dependents now?
« Reply #12 on: February 24, 2015, 07:52:45 AM »
Even though I haven't worked full time for a couple of decades now, I still have a term life-insurance policy. The reasoning was if I died, my husband would have to outsource child care and some other expenses. So my small policy was to help make sure those things weren't a financial burden.

As our daughter heads into teenagedom, we may revisit whether I still need a policy. We're in a community that would help provide support, if necessary, when my husband needed it.

This seems to be a pretty different situation than a single 27 year old.   Your family does rely on you for support, even if you don't work full time.

You're right - my situation doesn't offer much to the OP.

OP, unless you have a strong family history of chronic diseases that begin at ~30, you can probably wait until you have dependents (spouse, kids) before purchasing term life insurance.

acorn

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Re: Do I need term insurance if I have no dependents now?
« Reply #13 on: February 24, 2015, 08:56:03 AM »
Thanks for the replies, yes, it does make sense that there is no reason to get term insurance since no one else is going to be affected by my lost income. No reason to pay for something I don't need. I'll wait till I start a family before getting term insurance.

gergg

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Re: Do I need term insurance if I have no dependents now?
« Reply #14 on: February 24, 2015, 09:30:16 AM »
It sounds like you are assuming you will definitely be able to get it later if you want it.  Depending on your future health status, that MAY not be the case.  If you pick it up now, then you are locked in if your health were to deteriorate.  Not saying this necessarily makes it a good idea to get now, but something you should consider.

GizmoTX

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Re: Do I need term insurance if I have no dependents now?
« Reply #15 on: February 24, 2015, 09:31:14 AM »
By the time you start a family, you may be so FI that you don't need term insurance. We didn't.

Capsu78

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Re: Do I need term insurance if I have no dependents now?
« Reply #16 on: February 24, 2015, 09:42:46 AM »
This seems to be not necessary, unless you want to save your extended family the expense of your burial and funeral.  If you want to make sure to have that expense covered for them, then I'd get a very small inexpensive policy with enough funds to get that covered.  Otherwise No.

+1...a policy that would cover closing up your financial affairs (any credit debt etc, farewelling -funeral, tip for the gravedigger, a luncheon for your loved ones)  I  have heard the least expensive services still come in around $10 grand, "Normal" affairs with services etc could touch $18-20 grand.  Also, someone will need access to this money immediately to pay for things right away-  often people, in shock and mourning, have to make expensive decisions that they put on credit.  Someone may have to hire a movers to get your stuff out of your apartment etc.

A young guy can get a $25,000 or $50,000 term policy pretty cheaply.

Cheddar Stacker

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Re: Do I need term insurance if I have no dependents now?
« Reply #17 on: February 24, 2015, 10:54:04 AM »
This seems to be not necessary, unless you want to save your extended family the expense of your burial and funeral.  If you want to make sure to have that expense covered for them, then I'd get a very small inexpensive policy with enough funds to get that covered.  Otherwise No.

+1...a policy that would cover closing up your financial affairs (any credit debt etc, farewelling -funeral, tip for the gravedigger, a luncheon for your loved ones)  I  have heard the least expensive services still come in around $10 grand, "Normal" affairs with services etc could touch $18-20 grand.  Also, someone will need access to this money immediately to pay for things right away-  often people, in shock and mourning, have to make expensive decisions that they put on credit.  Someone may have to hire a movers to get your stuff out of your apartment etc.

A young guy can get a $25,000 or $50,000 term policy pretty cheaply.

Has anyone else thought about an MMM style funeral? Because those prices are nuts. I've thought this since I was a kid. Pomp and circumstance for a dead guy?

Give me donated organs, cremation, and a BBQ party at a park. Then my closest friends/relatives spread my ashes in the woods somewhere.

Maybe $1,000 for food/drinks, $1,000 cremation fee. Done.

lostamonkey

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Re: Do I need term insurance if I have no dependents now?
« Reply #18 on: February 24, 2015, 10:57:52 AM »
I am also in my 20s with no dependants. I only have life insurance because my employer pays for it.
If my employer didn't pay, I wouldn't bother having insurance. If I get hit by a bus today, my parents and sibling would get a nice windfall (my Stache).

Emilyngh

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Re: Do I need term insurance if I have no dependents now?
« Reply #19 on: February 24, 2015, 11:00:41 AM »
This seems to be not necessary, unless you want to save your extended family the expense of your burial and funeral.  If you want to make sure to have that expense covered for them, then I'd get a very small inexpensive policy with enough funds to get that covered.  Otherwise No.

+1...a policy that would cover closing up your financial affairs (any credit debt etc, farewelling -funeral, tip for the gravedigger, a luncheon for your loved ones)  I  have heard the least expensive services still come in around $10 grand, "Normal" affairs with services etc could touch $18-20 grand.  Also, someone will need access to this money immediately to pay for things right away-  often people, in shock and mourning, have to make expensive decisions that they put on credit.  Someone may have to hire a movers to get your stuff out of your apartment etc.

A young guy can get a $25,000 or $50,000 term policy pretty cheaply.

Has anyone else thought about an MMM style funeral? Because those prices are nuts. I've thought this since I was a kid. Pomp and circumstance for a dead guy?

Give me donated organs, cremation, and a BBQ party at a park. Then my closest friends/relatives spread my ashes in the woods somewhere.

Maybe $1,000 for food/drinks, $1,000 cremation fee. Done.

My aunt passed away last summer and my parents paid for everything.   There was a cremation, a memorial, and then a dinner at a local restaurant after.   The bill for the entire thing came to $3k.  My parents are well off and were in mourning, so they weren't even being deliberately frugal or anything.   

 My family would have no problem pulling together $3k for my burial etc, so insuring for it is ridiculous.     Saying "normal" affairs cost $18-$20k is like saying that a "normal" wedding is $50k, or "normal" college tuition is $200k, or a "normal" car is $40k.   Nonsense.   
« Last Edit: February 24, 2015, 11:02:28 AM by Emilyngh »

nobody123

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Re: Do I need term insurance if I have no dependents now?
« Reply #20 on: February 24, 2015, 11:03:39 AM »
Has anyone else thought about an MMM style funeral? Because those prices are nuts. I've thought this since I was a kid. Pomp and circumstance for a dead guy?

Give me donated organs, cremation, and a BBQ party at a park. Then my closest friends/relatives spread my ashes in the woods somewhere.

Maybe $1,000 for food/drinks, $1,000 cremation fee. Done.

This is a cut/paste from the "If I am dead" document that I gave my wife with a bulleted list of stuff she needs to take care of:

"Have me cremated and my remains disposed of at the lowest possible cost.  A quick google search shows a basic, immediate need cremation package should be around $1300.  Donít waste my money on anything fancy, I am dead and wonít appreciate it."

Cheddar Stacker

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Re: Do I need term insurance if I have no dependents now?
« Reply #21 on: February 24, 2015, 11:13:55 AM »
Also Capsu78, you mentioned credit card debts.

If you die with debt, your debt dies. Your brother/mother are not responsible for paying your debt. Your house will pay off your mortgage. Your estate, if you have one, will cover any other debts, but if you have negative net worth it dies with you unless you have a co-signer or joint debt.

Capsu78

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Re: Do I need term insurance if I have no dependents now?
« Reply #22 on: February 24, 2015, 12:18:50 PM »
I am not an expert on these details, just forwarding my memories from back to back conversations with a financial advisor and Funeral home director I talked to a few years back.  He was a CPA and the son of an accountant mother.  When she passed away he was quite surprised to need $40,000 cash quick for all sorts of "unwinding" of her burial, estate and financials.  No sad story for him as he had an emergency fund, but he was taken aback at how much cash he needed fast.  He had an average of around $20,000 passing hands shortly after someone dies.

As for average prices, I guess I used the word "normal" wrong... I am meaning in the non MMM world.  I assume many here would handle farewelling with the same frugility as they live.
 
Funny thing for my wife and myself is we can't agree on burial vs cremation.  She wants the former and I'm OK with the later.   While I am pretty much down to small family and some friends at my farewelling, she has a hundred or more people who work and have worked for her.  Most everybody likes her so she could fill a church... I'm just a crudmudgeon who doesn't suffer fools well so maybe I can fill the end of a bar with my mourners...at least if I'm buying from beyond!

To the OP- Yes, if your stache is greater than either the low or high end estimates bandied about, you could certainly "self insure".