Being debt-free is something to be hugely proud of, especially in today’s challenging financial climate. Maybe you worked hard to get a scholarship to school or saved up to buy your home outright. If you don’t have debt, you may be wondering if you really need life insurance. After all, one of the biggest reasons that people get life insurance is to give their family an easy way to pay off their debts if they pass away. Here’s what you need to know about life insurance in this situation.
Do I Need Life Insurance?
The short answer is that if you don’t have any debt, there is a good chance that you don’t need life insurance. Without debt, it’s unlikely that your family would go into a financial crisis if you were 
to pass away. Therefore, spending money on life insurance each month would likely be a waste of money.
There are many situations in which people are debt-free and don’t need life insurance. Many young people who live in urban centers won’t need life insurance because they choose to rent their homes and take public transportation. If you opted not to go to college, earned a scholarship, or got financial help from family, you wouldn’t have any student debt either. On the flip side, there are many older adults who have paid off all of their debts and no longer need life insurance. At this point in time, they may even have enough savings to cover funeral costs. Or maybe you’re just incredibly financially savvy, regardless of what age you are, and have managed to avoid debt with strong financial planning. In this situation, skipping life insurance and building your savings instead can be more beneficial.
There are a couple of common situations in which you would need life insurance without debt. The most common is that you need to provide for your family in case you pass away and they no longer have access to your earning power. Even without debt, your spouse may struggle to fund their lifestyle, pay for kids’ educations, and deal with emergency expenses. High net worth clients may also use life insurance to facilitate a tax-efficient transfer of an estate. Life insurance enjoys some preferential tax treatment, and there are lots of ways that wealthy people can take advantage of this “tax loophole”. This is why many people over the age of 50 are looking for life insurance. Whole life insurance can also be used as an investment, again primarily for wealthy individuals with unique needs. One place that people purchase whole life insurance policies without special planning needs, is buying baby life insurance. Life insurance bought for a baby can help get them off on a strong financial foot and build a savings account for a child starting at a young age.
People also use life insurance to cover funeral expenses such as burial costs, or any remaining final expenses such as cleaning the furniture and knick nacks out of a home. There are other options though, many people in older age choose to save up for this or to set up a pre-paid funeral plan.
What Policies Could I Benefit From?
There are some instances where you may want to take out a small life insurance policy, even if you don’t have any debt. The best option is usually a policy designed specifically to cover funeral expenses. Many companies offer these guaranteed issue policies without a medical examination. They typically have affordable monthly premiums and relatively low death benefits to cover just the basics.
Another option, particularly if you are getting older, is to take out a term life insurance policy specifically to cover any remaining expenses that your family might have if you pass away. You can calculate exactly how much you’ll need by looking at the costs of funeral expenses, and then adding the income you’ll need to support your dependents for an appropriate amount of time. Term life insurance policies are relatively flexible in terms of their length and death benefit amount, so you can choose one that best fits your needs. They are also much more affordable than whole life policies and make more sense for people who are already reaching their later years.
If you’re looking at getting a small life insurance policy to cover end of life expenses, it’s worth talking to an independent insurance agent to help you find the best option for your needs. Comparing a range of different life insurance policies is the best way to make sure you get a policy that fits your needs. If you aren’t sure whether or not you need life insurance, talking to an independent agent can also give you a better perspective on your financial situation. Working with an independent expert is important to make sure you get an unbiased opinion. You should always look for the best deal that you can get on life insurance, and the way to get a good deal is to compare life insurance quotes. Life Ant is built to get you the best deal on life insurance by comparing life insurance offerings from many companies.
How Can I Avoid Debt?
Staying out of debt as much as possible can be incredibly helpful for your financial success in the future. Here are some tricks to help you avoid debt.
- Do an in-depth search of scholarships and grants when applying to college or university. Go beyond the scholarships your school offers and look at offerings by private organizations as well. There are scholarships for almost everything nowadays, and you might be surprised by what you qualify for. Search for scholarships for your major, as well as scholarships targeted to people of your ethnic background, location, financial status, and more. The things that make you unique can actually help keep you out of student loan debt as well.
- Put money into savings when you can. During times when you have extra cash, try to resist the temptation to spend it. Instead, put it into savings, or even better, invest it so that money can grow. Even taking a small amount out of each paycheck to put into a savings account can make a huge difference down the road if you do encounter financial challenges.
- Consolidate any debt you do have. This will make it much easier to pay off in the long run, because you won’t incur as much interest. Many banks and other financial institutions have programs that make it very easy to consolidate existing debt into one monthly payment. When you don’t have to worry about making several different payments each month, things start to feel less daunting.
If you don’t have debt, count yourself lucky. You’ll be able to live without the financial stress that debt causes for millions of Americans. Your life insurance needs will also be much smaller too. If your family won’t incur any financial stress as a result of your death, you don’t need life insurance. You can skip that monthly payment and put it towards something else that will enrich your life. You can also opt for a very small life insurance plan for extra coverage if you feel you need it.
