Whenever I am asked, "Does a single person really need life insurance?" my mind immediately goes to two children. Both were under the age of ten, and both were eventually declared uninsurable. I’ll focus on one child—let's call him "Bob"—who was born with a genetic kidney disease.
Bob’s parents had considered buying him a life insurance policy early on. They were aware of the disease because
it ran in the family, but they were concerned about affordability and decided to take a chance. When Bob began
developing at a slower pace than his peers, his parents took him to a doctor. Tests confirmed their fears: Bob had
inherited the condition. In that moment, he became uninsurable.
This story illustrates a critical, and often overlooked reality: your true health can be worse than you expect. While
a doctor looks for current symptoms, insurance companies look deeper into your long-term risk. That deeper look
can have devastating consequences for your future ability to qualify for coverage.
Insurance premiums are primarily based on three factors: your age, your health and the company’s own expenses.
By securing a policy while you are young and healthy, you essentially "freeze" the conditions the company will
use: the premium - established through the company’s expenses, your health and your age - are held. It is like an
insect that is held in “amber”; preserved for all time. By buying insurance, you stop a future diagnosis - like high
blood pressure, diabetes, or a genetic condition - from making coverage unaffordably expensive or entirely
unavailable later in life. Think of it as protecting your "future self." Even if you don't have dependents today, you
are preserving the right to have protection for a spouse, children, or a business in the future.
However, the ripples, the waves that are created from this one decision don’t stop with that one decision. As an
example, most adults have a multitude of financial obligations to family and friends. If that uninsured person
passes away after you co-sign a loan with them, you can become responsible for the debt that they have.
Or worse, if a death occurs, it is not always clear how an estate should be wrapped up or how a sale should be
completed. In some cases, life insurance provides the necessary liquidity to complete a transaction or hire the
accountants and lawyers required to settle the estate properly. All of those things are not possible when life
insurance is not available.
If you need an example, think of a single person who might own a home. It could take 60 days or more to sell.
During that time, the bank still expects mortgage payments. Without a cash injection from an insurance policy, an
executor might be forced to accept a "low-ball" bid or a significant discount just to settle the debt quickly. A small
policy ensures your assets are sold for what they are actually worth.
There are many sophisticated tax, accounting, and investment reasons to own life insurance, but the most important
reason is the simplest: there will likely be a time in your life when you need it. Because insurance is significantly
cheaper when you are younger and carries a much lower risk of rejection, waiting is a gamble. Don't wait until
your body fails you or a diagnosis closes the door. For the single person, a small, permanent policy is a smart,
foundational step in a complete financial plan.
If you want to have a conversation about this, please call us.
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