Who Needs Life Insurance?

If you have financial dependents, life insurance might be a smart investment. Consult our guide to see if life insurance is right for you.

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Ross Martin

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  • 4+ years in the Insurance Industry

Ross joined The Zebra as a writer and researcher in 2019. He specializes in writing insurance content to help shoppers make informed decisions.

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Should I get life insurance? 

Life insurance is a great way to protect your loved ones in the event of unforeseen circumstances. If your death would have negative financial consequences on others, you need life insurance. A life insurance policy helps to ensure your loved ones have enough money to meet their financial needs.

Even if you don’t have kids or a partner to provide for after your passing, having life insurance ensures your final expenses won’t be passed to someone else. However, the amount and type of life insurance you should choose depends on your situation and financial goals.

Review our guide to the different scenarios in which life insurance makes sense.

Quick guide — you should get life insurance if:

  • You have dependents
  • Others would inherit your debt
  • You want to set aside tax-deferred money for the future
  • You want to make sure your final expenses are covered
  • Your employer provides it for free or at a subsidized rate
Who needs life insurance

When you need life insurance

While most people would benefit from life insurance, it’s especially important to obtain coverage if you fall into one of the following categories. 


If you have debt that would be inherited

Some types of debt are not wiped away upon your death and can fall to your loved ones. Credit card debt, for instance, or if you have a cosigner on a loan that is not yet paid — such as a private student loan — they would be responsible for the debt in the event of your passing. A life insurance policy could ensure that your debts and other expenses would be covered.

Your spouse may be required to assume your debt if you live in one of nine community property states: California, Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin. Also, your state could hold a spouse responsible for paying off any medical debt you take on prior to death.

If you are an entrepreneur, your death could negatively affect your business. A business partner could be held liable for debts that your business has accumulated. If your business might be at risk of failing without you, a life insurance policy with a business partner named as the beneficiary can help to keep it afloat.


If you haven’t set aside money for funeral costs

Funeral expenses can be surprisingly costly. Those who have not prepared could place the burden of paying for a funeral on their loved ones.


If your partner or children depend on your income 

If you have a spouse or domestic partner who depends on your income to maintain their lifestyle (mortgage, bills, debt repayment, child care or other day-to-day expenses), a life insurance policy is vital. Whether it’s for income replacement, paying off outstanding debts or providing for your children’s education, life insurance is a great way to help keep your family secure in the event of your death. 


Your employer provides it as a benefit

Even if you don’t have dependents or unpaid debts, an employer-provided group life insurance plan can be a good idea. Many employers offer subsidized life insurance plans that can provide a death benefit at no — or very little — cost. These policies are usually term life plans that provide only a death benefit. You may be able to sign up for these plans without a medical exam, though availability may depend on your limits and the life insurance provider.

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When you don’t need life insurance

If your death would not have negative financial implications for anyone else, a life insurance policy may not be necessary.

Furthermore, if you have significant assets that could sustain your family members and cover any and all expenses related to your death or medical bills, it might be more beneficial to make use of other financial tools that could earn higher returns for your loved ones.

What kind of life insurance is best?

When most people think of life insurance, they think about the large payout after the insured party dies — the death benefit. However, there are a number of different types of life insurance products that can provide payouts in many different situations — including before the death of the insured.

You’ll also need to decide on the amount of life insurance to purchase. Essentially, you need to make sure that the financial obligations of your family are taken care of. Below, we’ll highlight a few of the most common policy choices that work for a majority of individuals.

Who needs term life insurance?

Term life insurance is a good choice for people looking to provide a death benefit in the event of an early passing. This policy type will satisfy the financial needs of most individuals and provide financial protection to your loved ones. Term life insurance policies are typically cheaper than other forms of life insurance in the long run. 

Term life insurance is typically sold in “terms” from five to 30 years in length. Premiums must be paid for the duration of your term unless you have certain life insurance riders that intervene in certain situations. Your insurance premiums will typically stay the same for the number of years that you have chosen. However, you can expect that your insurer will require a medical exam when renewing your policy, and your premiums are almost certainly going to be higher than before.

Find out more about term life insurance policies.

Perks of term life insurance

Perks of term life insurance

  • Cheaper than cash-value policies
  • Provides death benefit
  • Can be purchased in a variety of term lengths

Who needs whole life insurance?

Whole life is a form of permanent life insurance that also contains a savings component. In general, a whole life policy is a good idea if you are interested in setting aside money for the future. Many see these types of policies as an investment tool to set aside tax-deferred money.

Beneficiaries will still receive a life insurance payout in the event of the insured’s death, but whole life insurance plans also offer a wider range of features and more opportunities for investment. The money paid into your policy through premiums can earn interest over time. You have a number of options for how to access this money, including through loans, dividend payments and surrendering the policy. You may also be able to sell the policy if you need to pay for long-term care.

Be aware, however, that any money made through interest is likely to be considered taxable income

Find out more about whole life insurance policies.

perks of whole life insurance

Perks of whole life insurance

  • The policy never expires (while premiums are paid)
  • Can provide returns before the death of the insured
  • Can offer tax-deferred savings in addition to the death benefit
  • The policy can be sold or surrendered

Other cash value policies

There are a number of other cash value life insurance choices available. These include universal life, variable life and variable universal life. All of these function in a similar way to a whole life policy, though they may differ in the level of investment control and volatility. Many life insurance agents may sell annuities as well, which function less like a life insurance policy and more like an investment vehicle. A life insurance agent or a financial planner can help you decide which policy type is right for your financial situation.

What to consider when deciding on life insurance

In short, life insurance is there to give policyholders peace of mind for the future. If you’re still on the fence about getting a life insurance policy, it could be a good idea to speak with a financial planner or life insurance agent.

How much your life insurance costs will depend on the type of policy and the amount of coverage that you choose. Ultimately this will come down to the amount of money needed to cover the living expenses of your beneficiaries, your burial expenses and any further money you would like to set aside.

It’s always a good idea to look at a number of life insurance companies when searching for the right policy.

About The Zebra

The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.

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