Who Needs Life Insurance?

min read
Updated: 17 May 2024
Written by
Jeff Bray
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As one begins to ask life’s bigger questions, one of these is do I need life insurance? In all reality, this question needs answering at a younger age, the closer to college and beginning a family as possible. As we guide you through this article, we aim to provide you with answers as to what to consider in your purchase decision.

In my nine years of experience, I have been able to connect shoppers like you with the best insurance that fits an individual’s current situation and financial needs.

Key Takeaways

  • An individual’s personal situation determines their need for Life Insurance

  • There are two basic forms of Life Insurance, Term and Whole Life. Term is for a designated time period; Whole Life is for the lifetime of the insured

  • An individual’s Gender, Age, Health, Location, and Type of policy will determine how much they will pay for Life Insurance.

Who Needs Life Insurance?

If someone depends on you financially, then you should consider a life insurance policy. Also, if anyone would be burdened by your debt, such as loans, if you pass away, then you may need life insurance.

Not everyone needs life insurance. Yes, an insurance representative admitted that their product may not be best for everyone. But I would not be doing my job if I were not honest. However, if you fall into the following categories, then life insurance will be something you should add to your portfolio.


It could be an interesting subject, talking about death while you are either dating or newly married. But it is a discussion that needs to take place. Life Insurance should pay for any bills you have incurred together and for final expenses, so you leave the surviving party without any financial obligation now that they are on their own.

Mortgage Holders

Purchasing a home is a major life decision. Be it an individual or a couple. That investment requires a significant financial commitment. When the name on the contract can no longer live up to the obligation of the mortgage through death, life insurance can become a saving grace to the surviving party. There are life insurance policies designed for mortgage protection.


Parents would love to leave a legacy to their children, or at least provide enough to cover final expenses so their children do not have to deal with bills upon their death. This can include funeral charges, their final living expense bills, and any balance due medical bills that may exist.

Minor Children

Between spouses, when one passes away, the other may need to make lifestyle changes with the loss of a spouse’s income. Having minor children adds to the burden. Having life insurance can assist with perhaps a relocation to lower expenses like rent, pay off a car, or assist with other expenses.

Parties to Divorce

Divorce can become interesting when it comes to life insurance, especially when a spouse is the beneficiary. If a policy exists, ensure that it is included in the proceedings and that you contact your insurance company to change the beneficiary if it is decided upon. However, you are still allowed to keep your ex-spouse as the beneficiary after a divorce as the relationship is not a stipulation.

Business Owners

It is known that fifty percent of businesses fail within the first five years. Many of these business owners take out loans to get started. When these loans are taken out, there is always a cosigner who will be a responsible party should the business owner not be able to fulfil their obligation. Life insurance allows those contracts to be paid in full and not have collectors seek payment from an investor or cosigner.

Empty Nesters

When the kids fly the coop, the house is paid off, and the car belongs to you, there is little need for life insurance. What you seek is finances for your kids to deal with medical and funeral expenses, to pay off what bills remain, and to do what needs to be done with your remaining assets.

Young Adults

As a young adult, you may not feel life insurance is that important. And true you don’t have much that would need to be insured. But you may have tuition bills or a vehicle lease, these need coverage, especially if you have a co-signer.

Did You Know: 53% of GenZ and Millennials already believe that they do not carry enough life insurance.

Who doesn’t need life insurance?

If you do not fall within the above categories, you are among the few. There are a couple more reasons why one doesn’t need life insurance.

You have substantial savings

If you have money in the bank and $50K is a walk in the park, then you can possibly put life insurance on the back burner. However, if you are risk savvy, then you can consider life insurance as an investment tool, as some forms of life insurance carry both a life insurance aspect as well as an investment portion.

No one relies on your finances

If you are single and you have no financial obligations, then life insurance may not be a requirement. Insurance is to protect those you leave behind.

Do I need life insurance?

A 2022 LIMRA study revealed that 68 percent of individuals said they feel secure where they are with their life insurance coverage. However, if you are asking questions about your life insurance options. Consider these things.

  • Does someone rely on you financially? – Having a spouse whose income you match in order to meet your financial obligations such as a mortgage can be a reason for life insurance. If you have children you support, in the home or outside is another.
  • Do you owe money for anything? – If you are a business owner or have taken a loan out for an entrepreneurial purpose and have named a partner or cosigner. Life insurance can protect the partner if they are vocal or silent.
  • Do you want to leave a legacy? – If you want to leave an amount of money behind that is above and beyond funds for final expenses, life insurance is a good vehicle to do this in. In most cases lump sum disbursement life insurance is tax free to the beneficiary. For 2024, it would require an estate of 13.16M for a life insurance policy to be taxable.

How much life insurance do I need?

This will always be the big question. How much is enough? One never knows when they will need to use their benefits, so it is always best to be prepared. When considering life insurance, use the DIME method to narrow down how much insurance you and your family will need.


How much do you owe? Factor in vehicle notes, college tuition, credit card bills, medical expenses, and other bills. Don’t include your mortgage here.


Consider how much you make and how long you think your family needs on that amount. This can come from multiplying your income by how many years you believe your family will need it. EXP: You make 50K per year, Median Life expectancy is 76 years old. The younger you are, the more life insurance you should carry; of course, dependent on the next two factors.


How much do you owe on your home? This will decline each year you own your home. Term insurance can be good for mortgage protection. There are even special policies called Mortgage Protection Insurance (MPI), these are reducing-term policies that decrease in value as you pay down your mortgage.


Was college in your family’s future? How much was their education worth?

According to LIMRA, sixty percent of individuals purchase life insurance to cover burial and final expenses, followed by leaving a legacy to their families.

What type of life insurance do I need?

There are several types of life insurance. Which type of life insurance depends on the purpose of your policy, how long you desire to have it, and in some cases your risk tolerance.


Term life insurance is just as it sounds; life insurance coverage for a specific duration. It is usually sold for 5, 10, 15, 20, 30 or 35 years. The younger and healthier you are and the shorter the duration the less costly the policy will be. Term policies are best for asset protection. For instance, you are making payments on a mortgage, a vehicle, or other investment with an ending payment date.

Whole Life

Whole life is for those who desire insurance for the monetary aspect of it. Yes, the asset protection still remains, but whole life policies do not have a termination date. They expire when the insured passes or the insured cancels the policy themselves. One benefit of a Whole Life policy is it can build up cash value the policyholder can use to withdraw, invest, or purchase additional amounts of life insurance.

Universal Life

Universal Life (UL) is an interesting type of insurance because one can adjust the policy. The policyholder can either adjust the premium or the death benefit as needed. Of course, one affects the other. The policyholder can also use the cash value of the death benefit to pay premiums, receive a loan, or withdraw.

Read More: What’s the difference between whole life & universal life insurance?

Variable Life

Variable Life is like Whole life, but it adds an investment portion to the policy. You can use the cash value portion of the policy and invest it. This can be a slippery slope as gains depend on the performance of the stock market.


Who is in the most need of life insurance?

If you own assets, you will need life insurance. This can be anything from a home, vehicles, a business start-up, or anything that you are in debt to that you either have another party cosigning with or someone else would be responsible for paying for upon your death.

What happens if I don't have life insurance?

If you do not have life insurance, then a spouse or loved one will be left with the responsibility of final expenses, bills, and moving on financially without you by their side.

How Do I Know If I Need Life Insurance?

If you are making debt payments on anything, are responsible for the well-being of another, or if you desire to leave a legacy behind, then you need life insurance.


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