Top Reasons Not to Buy Life Insurance

In this article...
  • Explore the top reasons not to buy life insurance. Find out when it may not be necessary to have life insurance or when other investments are better options.

Life insurance makes it possible to provide financial support to your loved ones when you die. Money from a life insurance policy can replace your income, cover your final expenses, pay off debts and cover the cost of higher education. Although life insurance is beneficial for many people, not everyone needs it. Knowing the reasons not to buy life insurance can help you assess your needs and decide if coverage is right for you. 

Top Reasons Not to Buy Life Insurance

You may not need to buy life insurance if any of the following are true.

  • You don't have any income to replace.
  • You have enough money saved to cover the cost of your burial or cremation and settle any outstanding debts.
  • You don't have any family to pass the money on to.
  • Your spouse or children will have access to money from another source when you pass away.
  • You have a very low risk of death because you're young, in good health and don't engage in risky work or recreational activities. People in these circumstances may wish to delay buying life insurance.

Certain types of people are less likely to need life insurance, such as:

  • Children and adolescents. Some parents still obtain policies for minors because they feel they may not be able to work after losing a child.
  • College students. Most college students don't need life insurance because they don't earn income and are unlikely to have debt beyond student loans, which are discharged after the death of a borrower.
  • Older adults who no longer have income and have paid off major debts may not need life insurance, especially if they have money saved. A small burial insurance policy could be purchased to cover final expenses.

What Are the Negatives to Buying Term Life Insurance?

Term life insurance is usually the most affordable way to get insured. Unlike permanent life insurance that lasts until you die, term life remains in effect for a limited timeframe called a term. Some drawbacks of term life include the following.

  • Coverage doesn't last forever, so you'll have to think about life insurance again in the future.
  • You must reapply for insurance when the term is up. You'll likely have to undergo a medical exam.
  • Premiums can increase when you take out a new policy.
  • You won't receive the benefits of a cash value that you can borrow against or use for expenses. Only permanent life insurance has a cash value.

What Is a Good Age to Get Life Insurance?

Generally, the younger you are when you buy life insurance, the better. Age is key when determining the cost of life insurance premiums, with older adults generally paying the highest rates. Plus, you're usually healthier when you're young, and chronic medical conditions lead to higher premiums.

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