Do You Really Need Life Insurance in These 2 Scenarios? Here's How to Tell

Need? Likely not. Want? Perhaps.

It's fair to say that most adults have someone depending on them financially. In a lot of cases, (such as adults with a spouse and young children), it's several people. For these folks, there is really no question they need a life insurance policy.

Life insurance is intended to replace income (in the case of someone who earns a salary that supports a family) or pay for services (in the case of a stay-at-home caregiver) that the insured person would provide. The good news is that coverage can be easy to buy and usually not terribly expensive, especially if you opt for term life over whole life insurance.

There are insurers and policies out there for just about anybody, and you can even get coverage without a medical exam. But what if you have no one depending on your income or work you do? Here are two situations in which you likely don't need life insurance… but may want to buy it anyway.

1. You're retired without debt or dependents

In the first scenario, you've concluded your working life by retiring. You've also paid off any debts that would otherwise have to be settled by your estate -- this might include a mortgage, a car loan, or even credit debt. If you're married or partnered, your spouse or partner isn't dependent on your retirement savings (they have their own, and if you own a home together, the ownership is joint with right of survivorship, meaning the property passes to their sole ownership if you die). If you have children, they are grown up and self-supporting, without need of your financial support.

2. You're childfree and not supporting a partner

In scenario two, you don't have children (and definitely won't have them in the future). You are either single or have a spouse or partner who isn't depending on your income for support. If you own a home together, the other person is capable of paying the mortgage on their own, or the home is paid off, and will pass to their sole ownership if you die). You have no debt, or minimal debt that can easily be covered by money you have saved.

Should you have life insurance anyway?

In both of the above scenarios, no one is depending on your income or services (like childcare) you provide. You don't strictly need life insurance. However, you might want it anyway. Why?

Funeral costs

If you're hoping for a lavish funeral, but don't want any loved ones to have to foot the bill for it, you can consider purchasing a small life insurance policy to cover the cost. According to the National Funeral Directors Association, the median costs for a funeral in 2021 ranged from $6,971 (cremation) to $7,848 (burial).

Leaving a charitable legacy

If you don't need to leave financial support for anyone, but want to benefit your favorite charity in death, you can name a charitable organization as your beneficiary. Note that you won't get a tax break for doing so, however.

Financial support for those who don't necessarily need it

Maybe you have nieces or nephews you're close to, or are a surrogate aunt or uncle to your best friend's children. You can consider getting a life insurance policy naming them as beneficiaries, with the intention to pay for education or other needs/wants. The same goes for scenario one, if you have grandchildren who are otherwise well supported by your children.

If life insurance isn't a "must purchase" for you, you still may have reasons to buy a policy. Consider your situation and whether you'd like to support an organization or a person in the event of your death, even if you don't have to. Getting life insurance for this purpose is a truly nice thing to do, and can be a great way to ensure you're remembered after your death. And if you're young and reasonably healthy now, it's definitely going to be easier and cheaper to get a policy in place sooner rather than later.