July 23, 2024

Is Term Insurance Needed for People With No Dependents?

If you read any advice or articles on how to prepare yourself financially, you will realize that term insurance tops the list. Financial experts and advisors all seem to say the one thing: protect your family’s financial future first before you invest your money in Mutual Funds, Stocks, or other instruments. However, the scenario little bit changes if you happen to have no dependents and in this article, we will learn whether it makes sense to buy term insurance if you are single and don’t have any dependents. 

Is Term Insurance Required for Individuals with No Dependents?

Many people wonder if they require term insurance even when they have no dependents. What one must understand is that, unlike other insurance policies that can be combined with investments or provide a maturity benefit, a simple term insurance plan provides no survival benefits. This means that if you outlive the policy period, there will be no payout. So the entire benefit of a term plan is only available if you die, and it only benefits the beneficiary, who is usually your family. So, if you have no dependents, a term plan may not be appropriate for you.

However, this does not exclude you from making plans for the future. You may be young today, but if you intend to marry and have children, you will have dependents over time and buying term insurance will be very expensive. On the other hand, if you do not intend to marry or have children, and do not anticipate having any dependents in the future, you may not require a term insurance plan. 

How can I know whether I need term insurance?

After answering the aforementioned question, we must address the question of whether you genuinely need insurance. Basically, if you are the breadwinner in your family and have people who rely on you financially, such as your husband, children, or parents, you need term insurance. If you and your spouse both work, either of you or the higher income may require term insurance. Thus, if you have no dependents, you may not require term insurance; however, if you anticipate having dependents in the future, a term insurance plan will be extremely beneficial.

How can having a life insurance plan help you?

  • Legacy: If you want to leave a lasting legacy, a life insurance policy can help you here. Whole life insurance plans are an excellent investment if you wish to leave a legacy. Whole-life policies cover you until the age of 99. If you die before this age, the sum assured is paid to your designated dependents. Even if you have no dependents, you can designate your parents or an organization as the beneficiary. This ensures that your legacy lives on even after your death.


  • Protection against Critical Illness Expenses: If you have a serious illness, you may face a significant financial burden. Critical illnesses such as cancer and heart problems necessitate considerable care. Treating them takes a long time, often a lifetime, and is quite expensive. These disorders force you to spend a significant amount of time away from work and in the hospital. This might cost lakhs of rupees. The medications used to treat these ailments are also quite pricey. This can cause a hole in your pocket. How will you manage such a large expense if you suffer from such an illness? Life insurance products allow you to add riders like critical illness, which can assist you shield yourself against the burden of expenses


  • Tax-Saving Potential of Life Insurance: Life insurance coverage might also help you save on taxes. The premiums you pay for your life insurance policy such as term insurance are tax deductible. You can claim a tax deduction of up to Rs 1.5 lakh on premiums paid under Section 80C of the Income Tax Act 1961. Not only are the premiums you pay tax deductible, but so is the maturity benefit you receive under section 10(10)D of the Income Tax Act. Thus, a life insurance policy is a sensible investment if you want to save money on taxes. Not only does life insurance save you money, but it also instills in you the habit of saving in general, which will undoubtedly come in handy when times are rough.


  • Long-term investment: A life insurance policy is not intended for short-term gains; rather, it is a long-term investment. The insurance company have agreed to pay you a certain amount in the future. So, just because you don’t picture yourself getting married and starting a family right now doesn’t mean you won’t in the future. Purchasing a low-cost life insurance policy at a young age will relieve you of the strain of planning your future once you have a family. Many life insurance policies allow you to increase your sum assured when you reach new milestones later in life. However, this will boost the premium as well.


  • Long-Term Assets: Certain types of life insurance policies, such as whole life insurance, include maturity benefits and the ability to withdraw during the term of your policy. As a result, it provides benefits even while you are still alive.


  • Retirement Safety: What if you intend to retire and explore the world? Or pursue another activity; if you have not prepared your finances, you will have difficulty doing so. After retirement, your monthly income stops, so you must carefully control your costs. However, if you purchase a pension plan, you will be able to live comfortably and happily after retirement. Retirement and pension plans need you to build up your savings in a fund over time. It thus yields a massive corpus. This corpus generates a monthly income stream that will benefit you after you retire.

So we are saying,

With these ideas in mind, one thing is clear: life insurance is a must-have whether or not you have dependents. This is because life insurance policies benefit you at nearly every stage of your life. It looks after you when you first start working, raises your sum assured when you marry and start a family, and continues to help you when you retire. There are several forms of life insurance policies, including ULIPs, term insurance, and endowment policies. You can select the one that best meets your needs and ensures your future safety.

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