Do I Need Life Insurance?

At its most basic function, life insurance is sold on behalf of those who rely on your income. And it is sold at a profit, so this isn't an altruistic venture. So the first step to deciding if you actually need a life insurance policy is to decide whether anyone else would be impacted by the loss of the income you provide. If you're married or otherwise partnered and share finances, would the other person be able to get by without that money?

If you have a lot of debt, such as a large mortgage on a home, the people you leave behind would benefit from getting a life insurance payout so they can pay off the mortgage, but you could also take the money you'd spend on that policy and invest it instead. And note that life insurance is NOT an investment.

If you've ever heard someone refer to life insurance as an investment, they were talking about a whole life insurance policy, which gains a cash value as you pay the premiums. Whole life insurance is extremely expensive, and there are much better investments out there.

If you feel you do need a life insurance policy, it's a better use of your money to opt for a term life policy instead. These don't build a cash value, and if you don't pass away during the covered term (often 10 years, 20 years, or beyond), you won't get any of your money back. But if you're in the process of paying off a mortgage with your spouse and know they wouldn't be able to afford the payments without you, this could be a good choice. And the easiest point of entry for a term life policy is likely a low-cost one through an employer's group life insurance program.

Ultimately, though, you likely don't need life insurance as a Childfree person. You don't have dependents in the form of children, and if you're single or otherwise managing your finances on your own, it doesn't matter whether your death benefits someone financially. Paying for a life insurance policy is like paying a monthly bill for no reason. If you do have questions about life insurance and whether you're in a special circumstance where it's worth paying for, ask your CERTIFIED FINANCIAL PLANNER™ for their guidance. And note that what you do need as a Childfree person is disability insurance, however – we'll cover that in a different post.