Who Needs Life Insurance 4 Reasons to Consider a Policy

Who needs life insurance? You might be surprised.

Conventional wisdom says that life insurance is for young people whose loved ones still depend on their income. However, there are myriad scenarios in which having life insurance can provide security for your loved ones and prevent financial hardship, even if your dependents have started families of their own.

Life insurance can help give people peace of mind that their families are protected if something unexpected happens. Here are four reasons you might consider purchasing a policy.

1. You're a Stay-at-Home Parent

Many people take out life insurance policies when they undergo a big life change, such as when they get married or when they start a family. It makes sense: If something were to happen to you, your family would lose your income. Life insurance is designed to replace the value of that income and prevent your loved ones from suffering long-term financial hardship.

But life insurance isn't just for the breadwinner. Stay-at-home parents' contributions to their families are incredibly valuable. A January 2020 study published by Oxfam America estimates the value of the unpaid work done by women in the United States at $1.48 trillion per year. (Oxfam also notes that more women stay at home doing unpaid labor than men, even in 2020.)

Some parents, especially parents with children who are still in primary or secondary school, look to term life insurance policies to provide for their families should they die prematurely. Term life insurance covers a fixed period — usually between 10 and 40 years — and provides a death benefit if you die within that term.

2. You Have a Mortgage

Life insurance isn't just for parents, or even married couples. Many partners in long-term relationships share incomes, expenses and bank accounts. You might not be married to your partner, but you might own a home and split the mortgage and the bills. If you died, those debts could fall squarely onto your partner.

Life insurance can be used to pay down your mortgage or other debts. A term life insurance policy that covers the length of your mortgage could help your partner cover the mortgage payments and other bills you used to share. Just make sure your partner is named as the beneficiary of the policy.

3. You Want to Cover Funeral Costs

Even if you don't have a partner or any dependents, you'll still have costs that will need to be covered if you die prematurely. Some people hold on to life insurance well into their retirement to cover end-of-life costs, such as funeral and burial costs, so that their loved ones aren't financially burdened while they grieve. The average funeral and viewing costs are north of $9,000, according to the National Funeral Directors Association. If you don't have a life insurance policy, your relatives, parents or siblings would likely have to cover these costs.

A whole life insurance policy that offers final expense coverage can help cover funeral costs as well as other major end-of-life expenses, such as estate taxes, probate and legal fees.

4. You Run a Business

Life insurance can benefit business owners, too. If you have business-related debts, your life insurance policy can help cover them. If your business is family-owned, the death benefit of a life insurance policy can help pay estate taxes when you pass the business down to your children. And a life insurance policy can facilitate a buy-sell agreement, which sets out how your share of the business is redistributed or sold in the event of your death.

Depending on your particular situation with your business, a long-term life insurance policy, such as a whole life or permanent policy, could suit you better than a term life policy.