{"id":320764,"date":"2025-11-07T16:22:46","date_gmt":"2025-11-07T21:22:46","guid":{"rendered":"https:\/\/www.reviews.com\/?p=115542"},"modified":"2025-11-07T16:22:46","modified_gmt":"2025-11-07T21:22:46","slug":"do-i-need-life-insurance","status":"publish","type":"post","link":"https:\/\/www.reviews.com\/insurance\/life\/do-i-need-life-insurance\/","title":{"rendered":"Do I Need Life Insurance?"},"content":{"rendered":"\n\n\n

It\u2019s easy to understand why parents need life insurance. If a family\u2019s main wage earner were to pass away, their surviving spouse and\/or children would likely need financial support to help cover things like living expenses, mortgage payments, and college education \u2014 and many households say they would face financial hardship within a month of a wage earner\u2019s death (LIMRA\/Life Happens 2024 Insurance Barometer highlights<\/a>).<\/p>\n\n\n\n

Almost everyone agrees on that fact. According to the latest consumer research, about 52% of U.S. adults report owning life insurance and roughly 41% say they need coverage or more of it; perceived cost remains a top barrier, and consumers often overestimate the price of term life by about three times (with younger adults most prone to overestimate) (source<\/a>).<\/p>\n\n\n\n

But what about families with two substantial sources of income? Older parents who\u2019ve paid off their homes? Younger couples without any children? Who else<\/em> needs life insurance?<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

Who needs life insurance?<\/h2>\n\n\n\n

Parents with children<\/h3>\n\n\n\n

Parents with children have arguably the most pressing need for life insurance. As parents doubtless already know, kids are expensive. While the USDA no longer updates an official \u201ctotal cost to raise a child\u201d series, a widely cited Brookings benchmark estimates $310,605 to raise a child to age 17 for a middle\u2011income married couple (in 2022 dollars) \u2014 roughly in the low\u2011$330,000s when adjusted to recent dollars (Brookings<\/a>). Factor in college costs \u2014 older estimates such as ($77,000<\/a>) often understate today\u2019s totals \u2014 and, well, things start to add up.<\/p>\n\n\n\n

Life insurance can help with any number of financial needs in the event that a parent passes away. The death benefit is generally handed down as a lump sum payment, so it can be put toward whatever expense the family finds most urgent: daily living expenses, daycare fees for younger children, funding college savings like a 529 plan<\/a>, adding car insurance<\/a> for teens, paying family cell phone bills, and so on. Keep in mind that workplace life insurance is a helpful baseline but typically limited (often around one year of salary), so many households still need supplemental individual coverage (BLS Employee Benefits<\/a>).<\/p>\n\n\n\n

For a more accurate estimate of what it\u2019ll cost to raise your<\/em> children, build a bottom\u2011up budget using current local inputs: start with the Brookings benchmark and adjust for your area\u2019s child care prices (U.S. Department of Labor NDCP<\/a>), your preferred USDA monthly food plan and food\u2011price outlook (USDA ERS<\/a>), and recent spending patterns from the Consumer Expenditure Survey (BLS<\/a>).<\/p>\n\n\n\n

It might also be worth using an online life insurance calculator to see how the cost of raising a kid translates to your life insurance coverage need \u2014 and note that many insurers now offer simplified or accelerated underwriting, making it faster to apply online (MIB Life Index trends<\/a>).<\/p>\n\n\n\n

Stay-at-home parents<\/h3>\n\n\n\n

It\u2019s pretty common to assume that only working parents need life insurance. After all, a life insurance death benefit is meant to cover costs that normally would have been paid for by a wage earner\u2019s salary.<\/p>\n\n\n\n

However, it\u2019s also important to consider the dollar value of services that might have to be outsourced if a stay-at-home parent were no longer in the picture.<\/p>\n\n\n\n

Recent data from Child Care Aware of America<\/a> and the U.S. Department of Labor\u2019s National Database of Childcare Prices<\/a> show national average prices around $12,800 per year for center\u2011based infant care, about $9,500\u2013$10,000 per year for a 4\u2011year\u2011old in a center, and roughly $10,000 per year for home\u2011based infant care \u2014 with high\u2011cost states and metros exceeding $20,000. In many counties, child care consumes well above the federal affordability benchmark of 7% of family income (HHS benchmark<\/a>). Tools like the Care Index<\/a> can help compare caregiver rates. These services \u2014 along with babysitting, cooking, housekeeping, shuttling kids around, running errands, etc. \u2014 might have to be hired out if a stay-at-home parent were to pass away. That\u2019s where life insurance would kick in.<\/p>\n\n\n\n

Couples without children<\/h3>\n\n\n\n

Nope, it\u2019s not just parents who need life insurance \u2014 but coverage often gets overlooked for couples who don\u2019t have direct dependents.<\/p>\n\n\n\n

Here\u2019s the thing: Even if you and your partner don\u2019t have children, you likely have shared financial obligations. Did the two of you go in together on a mortgage? Are you paying off a new car? Did one of you support the other in taking out a business loan to pursue their dream career?<\/p>\n\n\n\n

If one spouse passed away, the other would end up shouldering weighty debts like these. Life insurance can provide substantial relief in such situations. It acts as a backup plan for all of your biggest money concerns \u2014 kids or otherwise \u2014 and can supplement limited employer group life (often about one year of salary) with portable individual coverage (BLS Employee Benefits<\/a>).<\/p>\n\n\n\n

Adults supporting aging parents<\/h3>\n\n\n\n

Life insurance payments go to the policyholder\u2019s \u201cbeneficiaries,\u201d which are typically understood to be the spouse and children. But you should be thinking about your own<\/em> parents as beneficiaries, too.<\/p>\n\n\n\n

According to the U.S. Department of Health and Human Services<\/a>, many people age 65 and older will need long-term care at some point \u2014 and that care doesn\u2019t come cheap. The average cost of assisted living or a room at a nursing home ranges anywhere from $3,600 to $7,700<\/a> per month, and often more in high-cost areas. Children often end up assisting their parents with those expenses, or even footing the bill themselves.<\/p>\n\n\n\n

A life insurance policy can help ease the financial strain of paying (or helping pay for) long-term care. Your policy ensures that all of your loved ones, including your parents, would receive the care and financial support they need, no matter what happens.<\/p>\n\n\n\n

People with co-signed loans or joint accounts<\/h3>\n\n\n\n

We mentioned co-signers with regard to married couples, but it applies to single people, too. If you\u2019ve ever had someone co-sign a loan with you (be it a student loan, auto loan, mortgage, etc.) or open a joint account (like a credit card), they could be liable for any unpaid balance on those contracts. A life insurance policy can protect your parents, partner, or other financial supporter from having to pay debts that aren\u2019t covered by your savings or assets.<\/p>\n\n\n\n

Small-business owners<\/h3>\n\n\n\n

If you own a small business, odds are you took out substantial loans to kickstart or grow your brainchild. You might think that your business itself would provide collateral to pay off those debts if you were to pass away \u2014 but unfortunately, that\u2019s often not the case.<\/p>\n\n\n\n

\u201cWhen the family is forced to sell the business quickly, they may have to sell at a discount or during market conditions that make the business less attractive,\u201d says life insurance nonprofit Life Happens<\/a>. \u201c[And] in other cases, the business may be worth very little without the proprietor or partner.\u201d<\/p>\n\n\n\n

Life insurance can help cover outstanding business loans and other expenses required to get a company\u2019s affairs in order if its owner passes away. This protects their family from having to dig into savings or liquidate other assets to get the funds they need.<\/p>\n\n\n\n

Who probably doesn\u2019t need life insurance right now<\/h2>\n\n\n\n

Single adults with no dependents and no shared debts<\/h3>\n\n\n\n

This one might be self-explanatory, but: If no one else depends on your income, if you don\u2019t share finances with a partner, and if you don\u2019t have co-signed student loans, auto loans, or credit cards, you probably have little need for life insurance right now.<\/p>\n\n\n\n

That said, a minimal need for life insurance doesn\u2019t mean you shouldn\u2019t at least start thinking about it. Odds are you\u2019ll want coverage eventually \u2014 whether because you start a family, buy a house, or take out a small-business loan \u2014 and life insurance only gets more expensive as you get older. Try requesting a few term life insurance quotes online<\/a> to see how rates would shake out. You may find that you\u2019ll save money in the long run by buying earlier \u2014 and recent price indexes show that a healthy 30\u201335\u2011year\u2011old can often get $500,000 of 20\u2011year term coverage for roughly $20\u2013$30 per month (Policygenius Life Insurance Price Index<\/a>).<\/p>\n\n\n\n

Parents whose children are no longer dependents<\/h3>\n\n\n\n

We mentioned above that parents generally have the most pressing need for life insurance. But that may not be the case for parents whose children are grown and long past the point of \u201cdependency.\u201d<\/p>\n\n\n\n

As long as you have enough money in savings to cover final expenses and you don\u2019t have substantial estate management considerations, you might not need life insurance to set your affairs in order after you pass away.<\/p>\n\n\n\n

Keep in mind, though, that life insurance can offer protection outside of the death benefit<\/a> that you might miss out on by foregoing coverage. For example, add-ons like an accelerated death benefit or long-term care rider<\/a> offer up some of the policy\u2019s value during life to cover costs associated with a long-term illness. These can save the policyholder and their family from paying extensive medical and assisted living bills out of pocket.<\/p>\n\n\n\n

Make sure you\u2019re considering life insurance in all of its different lights before deciding to discontinue your policy or pass on renewal.<\/p>\n\n\n\n

High-net-worth households planning for estate taxes<\/h3>\n\n\n\n

You might think that the more wealth one has, the lower their need for life insurance. And that\u2019s often the case. If you\u2019re retired, debt-free, and have a well-stocked savings account, you might not need to worry about buying life insurance right now. There\u2019s a good chance your wealth would cover all necessary end-of-life expenses without the aid of a death benefit payment.<\/p>\n\n\n\n

However, there\u2019s one notable exception to that rule. People who plan to hand down a large estate \u2014 and we\u2019re talking really<\/em> large, as in more than $13.99 million per person<\/a> \u2014 should plan for their heirs to have to pay federal estate taxes. Those folks might consider life insurance as a way to cover estate taxes without their beneficiaries having to dip into their inheritance. Note: under current law, the higher exclusion is scheduled to be cut roughly in half after 2025 absent new legislation (Tax Policy Center<\/a>).<\/p>\n\n\n\n

Is life insurance as affordable as you think?<\/h2>\n\n\n\n

If you fit into one of the \u201cprobably needs life insurance\u201d groups listed above, you might be wondering whether a new insurance policy would fit into your budget.<\/p>\n\n\n\n

The good news? The idea that life insurance is expensive is a pretty common misconception<\/a>; it’s probably cheaper than you think. Recent national surveys find that consumers typically overestimate the price of term life by about three times, and Millennials are the most likely to overestimate (LIMRA\/Life Happens 2024 highlights<\/a>).<\/p>\n\n\n\n

The Life Insurance Market Research Association\u2019s most recent survey<\/a> showed that this belief is especially strongly held among millennials:<\/p>\n\n\n\n

\"Life<\/a><\/figure><\/div>\n\n\n\n

Here\u2019s the kicker: A high percentage of millennials say they prioritize utilities like cable and phone bills and activities like dining out or shopping ahead of life insurance. But a basic term life policy<\/a> is actually cheaper on a monthly basis than many of these other expenses. For a healthy 30\u201335\u2011year\u2011old, $500,000 of 20\u2011year level term coverage often costs roughly $20\u2013$30 per month, depending on insurer and health class (Policygenius Life Insurance Price Index<\/a>).<\/p>\n\n\n\n

That means for the same price as a nice meal out (or a single month of TV streaming<\/a>), you could secure a few hundred thousand dollars’ worth of financial protection for your loved ones. We won\u2019t tell you how to manage your budget, but it\u2019s worth thinking about it in these terms before you decide whether or not to make life insurance a priority.<\/p>\n\n\n\n

Where to learn more<\/h2>\n\n\n\n

If you\u2019re convinced that you need life insurance but not sure where to begin looking, we have some resources to help you out. Check out our FAQs on term life insurance<\/a> and whole life insurance<\/a> for more information about the two most popular types, or see this article on term versus whole life insurance<\/a> for a head-to-head comparison.<\/p>\n\n\n\n

For more guidance on how life insurance works and what it actually covers, take a look at these guides:<\/p>\n\n\n\n