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Is life insurance worth it and when do you need it?

Life insurance can be pricey but very worthwhile for those who have dependents, and even in some cases for those who don't have dependents.

We’re all going to live forever, right? That’s a rhetorical question and the answer is obviously, no. But it is hard to talk about life insurance without talking about death. 

If you were to die, would your family be financially stable without you?

Depressing, I know, but this is a necessary question that everyone should ask themselves. If the answer is no, chances are that life insurance is for you.

Is life insurance worth it?

If you have dependents, life insurance may be worth the premiums you’ll pay. It helps give you peace of mind of knowing that your spouse, children, and anyone else who relies on your income will be taken care of if you die.

If you don’t have dependents, there still may be circumstances where it’s worth it, but you should do the calculations to make sure you’re getting value for your money.

If you do need life insurance, consider term

There are two types of life insurance: permanent and term.

Permanent policies are exactly what they sound like: life insurance until the day you die. They’re also far more expensive than term life policies — sometimes as much as 10 times the cost. Whole life is the most expensive type of permanent insurance, but people who choose whole life often do so because of the cash benefit that builds up in a whole policy.

A term life policy, on the other hand, can be bought for a series of 10, 20, or even 30 years. Most people buy a policy to cover them until they retire, until their mortgage is paid off, or until their children are grown. That’s why a term policy can be better than whole — because it only covers the amount of time you actually need life insurance due to financial obligations.

Is life insurance worth it if you don’t expect to die by the end of your policy term?

The short answer? Yes.

A friend of mine was complaining recently about his insurance payments. While he pays his life insurance premium every month, there’s little chance his family will ever get a life insurance payout.

He was frustrated by the aspect of life insurance that makes it so unappealing to most people. If the policy never gets used, the payments seem like wasted money. If it does get used, the payout will be little consolation in the face of overwhelming grief.

I reminded him that he’s not buying a policy so much as he’s buying peace of mind. He can rest easy knowing that if something happens to him, he’s done all he could to help with financial protection for his family. That’s what all insurance really is — a measure of protection to make you feel better.

Who needs life insurance?

Some experts advise those without dependents to skip life insurance. But that can vary. Here are a few groups who might need to consider insurance.

Those with dependents

Having life insurance is almost always a necessity if you’re a parent, unless you have significant savings in the bank or your retirement accounts (and even then, it’s still a good idea).

Kids are expensive, and raising them on one person’s salary can be almost impossible. There are too many sad stories out there about families who had a great life until one parent died, forcing them to downsize just to scrape by.

If you’re not worried about passing away before your time, think about how you’d feel if your children could no longer afford to go to summer camp or after-school activities. That’s what life insurance is for — so your loved ones won’t suffer any more than they have to when you die.

It’s especially important to buy life insurance for both parents, even if one person stays at home. Consider this: If you stay at home with your children, your partner will have to pay for childcare when you’re gone. In many cases, that can cost nearly as much as a full salary.

Those with partners

When I called my life insurance agent, he explained that it is really for those couples looking to replace their income when they die so their partner or dependents aren’t stranded.

Most agents do recommend buying life insurance if you share a mortgage with someone. It can be extremely difficult to sell a house quickly if you need the money, and a life insurance policy can help your loved one make mortgage payments if they decide to stay in the home. If you own your home outright and don’t have kids, then you may not need a policy.

Who doesn’t need life insurance?

Those without dependents

Some experts advise those without dependents to skip life insurance. But that can vary from one case to the next. In the event something happens, will you leave behind loved ones who will need to make funeral arrangements and tie up any financial loose ends? A life insurance policy can help, as they sell your assets and take care of any debts that can’t be excused.

Before you purchase a policy, though, check to see if there might be another way to get the same results. Instead of paying premiums into a policy that will issue a payout, you may instead want to put some money in a trust and have a will to direct where the money in that trust should go. 


Buying life insurance for your children or other dependents may be unnecessary since they’re usually not bringing in any income. Remember, term life insurance is to replace someone’s income, but a child doesn’t provide any money to the household (unless your kid is one of the actors from “Stranger Things”).

As an alternative to purchasing life insurance, invest money in a 529 for your child’s college fund or save a bigger emergency fund. Either will provide better returns than a life insurance policy.

When should you consider purchasing life insurance?

Many consumers make the mistake of assuming that they don’t need life insurance because they’re young. While the likelihood of an event is lower when you’re younger, that doesn’t mean something can’t happen. In fact, the top reason experts recommend buying life insurance when you’re young is that it’s typically priced lower for younger consumers.

The biggest thing to consider, when weighing life insurance options, is the impact your untimely death would have. Will your dependents have enough money coming in to continue their current lifestyle? Determine how much they would need for the foreseeable future when deciding on the amount of coverage to buy.

When shouldn’t you purchase life insurance?

While the decision is ultimately up to you, you may not see the same benefits from a life insurance policy if you have no dependents. If your death would not financially impact others, there are better ways to ensure your funeral expenses and final debts can be easily settled.

In this circumstance, take the same money you would have spent on life insurance and save or invest it.

If you’re concerned about risk, put the funds in a low-risk account like a high-yield savings account or CD. Or, if you’re comfortable, put your funds into investments with a higher risk.

Either way, you can make sure you have the financial assets to settle your debts, as well as pay for final expenses, without having to pay premiums to an insurance company.

How do you know what type of life insurance you need?

When shopping around for a life insurance policy, here are a few things to consider.

Cost of premiums

The cost of premiums varies by age and insurer. Annual premiums for those under the age of 35 range in the $300s, which is around $30 per month. If you smoke, it is definitely higher. Price around and get multiple quotes to make sure you’re getting the best deal.

Length of term

If you’re signing up for term life, the term length comes into play. Policies usually range from 10 to 30 years. The longer the term, the higher your rates are likely to be. Insurers know that during a 30-year term, a policyholder is more likely to die than during a 10-year term, so rates increase to compensate for that.

Policy adjustments

Most often, you’ll find that once a policy is purchased, you’ve committed to that policy for the duration. But some companies allow you more flexibility. Some online insurers allow you to adjust your coverage in either direction at any time. You can also cancel without question. This type of provider may offer the flexibility you’re seeking.

Application requirements

Life insurers will want some information on you before qualifying for a policy. You’ll likely be asked to provide details about your health and lifestyle. Traditionally, a quick medical exam has also been required, but that might be done at your home, utilizing a traveling medical professional. Some newer insurers use data analytics to determine your insurability, letting you skip the exam requirement altogether.

Policy turnaround time

On average, you can expect to wait three to eight weeks to get a policy after your initial application. But the emergence of online insurers means you may be able to shorten that time. Some insurers can have a life insurance policy in your inbox within a few days of application.

Where to buy affordable life insurance

Even once you’ve decided life insurance works well for your needs, you can stall when it comes to lining up a policy. There are, after all, so many choices, and signing up for a policy takes time. You have to answer a bunch of questions, wait for a quote, and then go through a time-consuming physical exam that includes having blood drawn. Or do you?

If you would like to shop around for the best life insurance rates, including for those insurers who don’t require medical exams, I suggest using an insurance marketplace like Policygenius. There, you can get individualized quotes without the need to fill out multiple individual life insurance quote forms.

Otherwise, here are some of our top picks from the best life insurance companies:


One of the toughest things about signing up for life insurance is the commitment it requires. Ladder remedies that, letting you change your coverage at any time. If you need to reduce the premiums you’re paying, for instance, you can decrease your coverage amount and pay less.

Ladder Life Insurance

Ladder offers addorbable term lengths between 10 and 30 years with a coverage minimum of $100,000 and a maximum of $8 million. The company is unique in that it gives you the option to “ladder” your coverage, which allows you to adjust your death benefit as your family’s financial needs evolve.

  • Affordable term life coverage
  • Easy application
  • Option to “ladder” your coverage
  • Only sells term life policies
  • No riders available
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Ladder Insurance Services, LLC (CA license # 0K22568; AR license # 3000140372) offers term life insurance policies: (i) in California, on behalf of its affiliate, Ladder Life Insurance Company, Menlo Park, CA (policy form # P-LL100CA); (ii) in New York, on behalf of Allianz Life Insurance Company of New York, New York, NY (policy form # MN-26); and (iii) Fidelity Security Life Insurance Company®, Kansas City, MO (policy form # ICC17-M-1069, M-1069 and policy # TL-146) in the District of Columbia and all states except New York and California. Only Allianz Life Insurance Company of New York is authorized to issue life insurance in the state of New York. Insurance policy prices, coverages, features, terms, benefits, exclusions, limitations and available discounts vary among these insurers and are subject to qualifications. Each insurer is solely responsible for any claims and has financial responsibility for its own products.

Ladder’s term life insurance policies are available in term lengths of 10 to 30 years, in five-year increments, with coverage ranging from $100,000 to $8 million.

Fabric by Gerber Life

Fabric by Gerber Life Logo

Fabric by Gerber Life offers term life insurance at affordable rates for everyone. This company provides a more comprehensive insurance buying experience that puts family first and helps you figure out what you really need.

The coverage range for Fabric by Gerber Life is $100,000 to $5 million and terms are available for between 10 and 30 years. 

The Bottom Line

An insurance agent likely won’t tell you this, but not everyone needs life insurance.

If you’re considering buying a policy, make sure you do your research before signing up. You could end up paying more than you have to for coverage you really don’t need.

If you have dependents, a term life policy could give you peace of mind, knowing your loved ones will be taken care of in the event the worst happens.

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