So whenever I am asked, “does a single person need insurance”, two children come to mine. Both Children were under the age of ten and both were declared to be uninsurable. For our purposes, I will focus on one child because he had a genetic kidney disease. I will call him “Bob”.
In Bob’s case, his parent’s had thought about buying him a life insurance policy early on. His parent’s knew about the disease because members of their family had it. However, they ran into an issue of affordability. So they took a chance. However, when Bob developed at a slower pace than his peers, his parents did the right thing and took him to the doctor. Tests were booked and performed and the test confirmed that Bob had inherited the condition. As a result, he became uninsurable.
That short anecdote is important because it illustrates a simple problem: one’s true health can be worse than expected. While, a doctor usually asks if a person has any symptoms, life insurance companies often look a bit deeper before they issue a policy. That deeper look can have devastating consequences. This is especially true for one’s insurability and this can become a problem when one needs to apply for life insurance.
Think about it. Most single persons rarely think about life, health and/or disability insurance and rarely think that they will need it. They don’t have to depend on anyone so, they think that life insurance is an unnecessary expense. But that is generally not true. For, single people have a multitude of responsibilities and obligations to family and friends. These obligations could result from asking a friend or parent to co-sign a loan; or sometimes, by buying a piece of property like a house or a time share with a family member. Each of those circumstances presents both an opportunity and a risk. The opportunity is obvious. In the case of co-signing a loan or buying a rental property, the single person has the opportunity for monetary gain.
However, the risk to the family member or friend is equally obvious: how do we complete the transaction if a death happens? For, if you co-sign a loan, you own the property. Or if you bought a property with someone who becomes deceased – even with a will – it is not always obvious how the estate should be wrapped up and the sale completed. In these cases, life insurance can help because it can provide the funds to complete a transaction or provide the funds to allow accountants and lawyers to go to the courts to settle out an estate. All of these possibilities lead to the need for life insurance.
Therefore, I often tell Bob’s story. If one delays buying life insurance when one needs it, your body could fail you. Because of age, risky behaviour or health complications, one could find themselves uninsurable and unable to make important transactions. While, there are many tax, accounting or investment reason to have a bit of life insurance, I find the most important reason is the simplest: there might be a time in your life where you need it. Given that it is often cheaper when one is younger and there is less chance of rejection, I always suggest that a financial plan is only complete after one has a small policy which has a face value of between $25,000 and $100,000. For, such an amount will allow your executor to wind down your estate in a smart and prudent manner.
Think about it, if you own a condominium or a small house, it could take as many as 60 days to sell it. If you die and there is a mortgage on the house, the bank or lender still expects a mortgage payment. Without a large sum of money, an executor might have to sell that house at a significant discount. Even a small policy would ensure that a substandard or “low-ball” bid won’t have to be accepted. Accordingly, for me, the answer is a simple one: even single people need a bit of life insurance.
In Bob’s case, his parent’s had thought about buying him a life insurance policy early on. His parent’s knew about the disease because members of their family had it. However, they ran into an issue of affordability. So they took a chance. However, when Bob developed at a slower pace than his peers, his parents did the right thing and took him to the doctor. Tests were booked and performed and the test confirmed that Bob had inherited the condition. As a result, he became uninsurable.
That short anecdote is important because it illustrates a simple problem: one’s true health can be worse than expected. While, a doctor usually asks if a person has any symptoms, life insurance companies often look a bit deeper before they issue a policy. That deeper look can have devastating consequences. This is especially true for one’s insurability and this can become a problem when one needs to apply for life insurance.
Think about it. Most single persons rarely think about life, health and/or disability insurance and rarely think that they will need it. They don’t have to depend on anyone so, they think that life insurance is an unnecessary expense. But that is generally not true. For, single people have a multitude of responsibilities and obligations to family and friends. These obligations could result from asking a friend or parent to co-sign a loan; or sometimes, by buying a piece of property like a house or a time share with a family member. Each of those circumstances presents both an opportunity and a risk. The opportunity is obvious. In the case of co-signing a loan or buying a rental property, the single person has the opportunity for monetary gain.
However, the risk to the family member or friend is equally obvious: how do we complete the transaction if a death happens? For, if you co-sign a loan, you own the property. Or if you bought a property with someone who becomes deceased – even with a will – it is not always obvious how the estate should be wrapped up and the sale completed. In these cases, life insurance can help because it can provide the funds to complete a transaction or provide the funds to allow accountants and lawyers to go to the courts to settle out an estate. All of these possibilities lead to the need for life insurance.
Therefore, I often tell Bob’s story. If one delays buying life insurance when one needs it, your body could fail you. Because of age, risky behaviour or health complications, one could find themselves uninsurable and unable to make important transactions. While, there are many tax, accounting or investment reason to have a bit of life insurance, I find the most important reason is the simplest: there might be a time in your life where you need it. Given that it is often cheaper when one is younger and there is less chance of rejection, I always suggest that a financial plan is only complete after one has a small policy which has a face value of between $25,000 and $100,000. For, such an amount will allow your executor to wind down your estate in a smart and prudent manner.
Think about it, if you own a condominium or a small house, it could take as many as 60 days to sell it. If you die and there is a mortgage on the house, the bank or lender still expects a mortgage payment. Without a large sum of money, an executor might have to sell that house at a significant discount. Even a small policy would ensure that a substandard or “low-ball” bid won’t have to be accepted. Accordingly, for me, the answer is a simple one: even single people need a bit of life insurance.
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