If you’re single, you probably haven’t taken some serious time considering what insurance policy you need. You don’t have a family of your own to look out for in case you die early, so why stress, right?
This is the common insurance misconception single folk have. Signing up for insurance policies don’t only reimburse you for any related losses, but it also makes sure that any family members you have won’t have to bear the burden of any outstanding debt you have in the unfortunate event you fall ill or die. But more on this later…
In this article, we’ll take a look at some of the insurance policies single people should sign up for, no matter how healthy and financially stable they claim to be.
When ‘insurance’ is mentioned, health insurance is usually the first thing that springs to mind and it’s for a good reason. We all know hospital bills can cost an arm or a leg. The situation is dire: two-thirds of Americans that file for bankruptcy point to medical issues as a reason for their financial downfall.
It’s bad enough being in the hospital, but coming home to a medical bill worth 5 figures can really destroy you mentally and emotionally. If you’re already working, your employer may provide you with some type of health insurance coverage.
If not, you’ll need to look for one on your own. According to an article from PolicyScout, under the Affordable Care Act, all health insurance policies have a “minimum essential coverage”. However, this may not be enough for your needs and it’s important that you read the fine print of the insurance contract.
If you have any outstanding student loan debt and you pass away before it’s paid off, your co-signer will be responsible for settling it. In most cases, it’s the parents.
While they’re grieving for their child, you really don’t want to trouble them with this debt. Once your life insurance policy pays out, they’ll have the money to cover this debt and also cover funeral costs, which can cost between $6,000-$7,000.
There are multiple types of life insurance policies, but the two common ones are term life insurance (TLI) and whole life insurance (WLI). The main objective is the same, which is to provide the beneficiaries of the policyholder a lump-sum payment (death benefit) when the policyholder dies.
For TLI, your policy is only valid for an agreed-upon duration. TLI is usually sold for terms of 10-30 years. With WLI, you are set for life and don’t have to worry about renewing the policy. However, it makes more financial sense to go for TLI, especially if you are young.
It’s important for you to do proper research when it comes to choosing whole life insurance because it can be a matter of saving thousands of dollars annually on your premiums.
Long-Term Disability Insurance
When you are single, you may not have someone to depend financially on like how a spouse can if you become disabled and cannot return to work.
Disability insurance can pay out for a few years up to retirement, depending on the policy you sign up for. Once you have the policy in place, if you do become disabled and are eligible for the payout, the insurance company will pay a percentage of your usual salary (usually 50-60%) every month. Keep in mind that once you file a disability claim, there is a waiting period called the elimination period before you start receiving your payout.
This elimination period varies but is usually 30, 60, and 90 days.