The usual response to “Can I buy term life insurance if I have no dependents?” is, “No, it is unnecessary. Life insurance is only for those with dependents”. While this is perfectly fine, my view on this – initially aligned with the standard answer – has changed over the years.
Often, young, unmarried earners ask this question. Does such a person need life insurance? The answer is, “it depends”. We tend to assume only a spouse and child are dependents. Often, the parents may not be financially secure. Young brothers and sisters or other relatives could still be in school or college. If that is the yes, then the young earner should buy term life insurance.
Today, term life insurance policies are extremely inexpensive if young, healthy, non-smokers and teetotalers buy them. So, even if a person has no dependents today, they can buy one if they expect to get married and start a family later. The premiums (unlike health insurance) are going to be the same.
Then there are unmarried older people with no parents to take off. They could even buy a term life insurance cover and name charity or trust as the nominee with a will indicating them as beneficiaries if required.
Finally, a related point. Many argue that once net worth exceeds the life insurance cover, the term plan can be discontinued (you must stop paying premiums). While this is technically correct, the premium will be peanuts once your net worth becomes that high. So it is no big deal to keep the life cover alive. It cannot harm and provides the family with an extra crore (or so).
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Sometime back, a reader gave me this exact reason for buying a whole-term policy. The insurance sum serves as an inheritance for their children or grandchildren. Yes, such policies are usually more expensive than a simpler life cover up to age 60, but getting one cannot harm if one has money to spare.
Earlier, I used to insist that one should always buy a simple, plain vanilla term plan until retirement. These days, I say, “Just do it. Just buy a cover, any kind of cover, as soon as possible without delay”.
Also see: Things to do AFTER you take a term insurance policy!
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