The main reason people tend to get life insurance is that someone depends on them financially. There are other reasons, too, like if someone co-signed your student loans, or you have a mortgage.
But we’ve spoken to many people who seem to need insurance, but don’t have it. (Do you need life insurance?)
Their reasons (or, um, excuses) range broadly. We’ve listed the most common ones we’ve seen—and we’ve done the research to help explain the truth of the matter.
Full disclosure: Fabric sells term life insurance, which we believe is the best choice for many consumers. It also means we know a lot about life insurance!
When it comes to who does not need life insurance, that depends on each individual situation. In some cases, if you don't have children or other dependents, have no debt, don't co-own a business and no one counts on your financial contributions, you might be fine without life insurance.
But there are lots of other cases where people's reasons for skipping life insurance simply fall flat.
The purpose of life insurance is to help provide a secure financial future for your family after you’ve passed away. Term life insurance is an agreement between you and an insurance company. It says that if you pass away while your monthly payments are paid-up, the insurer will make a lump sum payment to the people of your choosing.
This could be your spouse or child, who can use the money for anything, like mortgage payments or college tuition.
But hey, if you’re immortal, then sure, you probably don’t need life insurance.
Some policies may not be available to people who are under 21 years old (for example, the policies offered through Fabric). So this really could be a reason not to apply . . . for now.
Of course, nothing’s stopping you from setting a Google Calendar alert for your 21st birthday. And then getting an amazing gift for your loved ones in honor of your own birthday: a life insurance policy.
To apply for 20-year term life insurance, you’ll generally need a little information on hand. For example:
Your name, address and date of birth
Your general health information, like height, weight and any conditions you have
Your employment info, like an estimate of how much money you make and the name of your employer
Your driver’s license and Social Security number (insurers need this info to verify you really are who you say you are)
The name of the person (or people) you want to receive a payout in the event of your death
Most people can come up with this information without too many problems. If you’re not totally sure who you should appoint as the person to receive your payout, you can check out our handy guide to life insurance beneficiaries.
It’s true that applying for life insurance can sometimes be a process. Traditionally, it required scheduling a visit or two with an insurance agent. But luckily, technology has been making this much smoother in the last few years.
If you apply online for life insurance through a company like Fabric, you may be able to get through the whole application in as little as five minutes. You may even receive an offer for coverage right away.
Of course, in some cases your application may still need to be reviewed before an underwriter can decide whether you can be covered and for how much.
Put simply, no. Quite the opposite, actually.
Especially when it comes to term life insurance, many people get a policy when they become parents or have people who depend on them financially. Premiums are almost always lower if you get a policy while you’re young and healthy. (Psst: These are the healthiest cities in America.)
You might choose a 20-year term, for example, to cover you through your child-rearing years so your family would have something to fall back on if your financial contribution were to suddenly disappear.
After those 20 years, you might very well not have the same financial obligations (because hopefully your kids will have successfully entered adulthood) or you’ll have saved up enough money on your own by then to take care of your family’s needs.
Maybe. Maybe not. Here are some things to watch out for:
Will they struggle to pay for your funeral or last rites?
Is there a chance they’d have to sell the house to cover the mortgage payments, now that you’re not contributing?
Do they have any debt to pay off? Will this be harder to do without your income?
Will your family be able to meet long-term goals like retirement and saving for college on a single income?
Here's more on what you should do with a life insurance benefit.
“Let them mourn me!” you say. “That includes going into debt to pay for my funeral. Maybe they also have to move out of the house and struggle financially in other ways. That’s how I know I’ll be missed!”
Well, um. We humbly disagree. But OK, sure.
When someone dies, their debt isn’t necessarily forgiven. If someone else has co-signed your loans, then that person could be on the hook for your borrowing, even if you’re gone.
For many people across America, this takes the form of parents or other family members co-signing for student loans. Certainly, your parents should’ve known what they were signing up for when they put their name on your debt. But they probably also expected you to maintain a job for years to come, and to pay off the debt yourself.
Would it be a big burden on them to pay off your loans if you were no longer contributing to your own repayments?
Two of the most common types of life insurance are term and whole life insurance.
Term life insurance is straightforward: It covers you for a certain time period (the “term”) by providing a death benefit to your beneficiaries if you were to pass away while the policy is active. So, if you have a 20-year term, you’re covered if you pass away during those 20 years. If not, your beneficiaries won’t receive anything after that time runs out.
Meanwhile, whole life insurance offers coverage for your entire life. In addition to paying a death benefit, whole life policies also have the ability to build cash value over time, which you can borrow against or withdraw from while you’re alive.
So, it’s true that you don’t get your premiums “back” with a term life insurance policy, whereas whole life policies have a guaranteed payout so long as premiums are paid and no outstanding loans exist. But whole life insurance tends to be more complex and much more expensive. Fees and expenses can also reduce your cash value, which can, in turn, affect the benefit amounts.
Seriously: Term life insurance can be as much as 30 times less expensive than whole life insurance. In which case, it often makes financial sense to simply buy insurance as protection rather than as an investment vehicle. You can always invest or save the cost difference between a term and a whole life policy.
There’s something to be said for talking to a real human . . . but that person may offer you more expensive or complicated types of insurance than you want. If you're not looking to explore additional types of life insurance, then meeting with an insurance agent who offers more than term life insurance may end up being a frustrating experience.
Plus, the traditional process of buying life insurance tends to be decidedly non-digital. You might even need an in-person meeting just to get started, instead of getting a quote with a few clicks of a mouse or applying online. (That said, Fabric does have licensed insurance agents available if you have any questions along the way.)
We’re all about human connection. But in our opinion, at least, we don’t need to get that from our insurance agent. That’s what friends and family are for. And saving time on our life insurance application lets us get back to just that.
Fabric exists to help young families master their money. Our articles abide by strict editorial standards.
This material is designed to provide general information on the subjects covered. It is not, however, intended to provide specific financial advice or to serve as the basis for any decisions. Fabric Insurance Agency, LLC offers a mobile experience for people on-the-go who want a easy and fast way to purchase life insurance.
As Fabric employees, we spend our days talking about life insurance. And some nights. Here are the kinds of life insurance we chose and why.
You won’t be turned away from accessing life insurance for being transgender, but it can be more challenging to navigate a system built for a cisgender, M/F profile.
Convertible life insurance offers the option to convert from term life to permanent. Here’s who can benefit and who may not need the coverage or cost.
Securing your family’s financial future is an important plan to cover as a parent. Get answers to the questions parents have about life insurance.
Accidental Death Insurance policies (Form VL-ADH1 with state variations where applicable) and Term Life Insurance policies (Form ICC16-VLT, ICC19-VLT2, and CMP 0501 with state variations where applicable) are issued by Vantis Life Insurance Company (Vantis Life), Windsor, CT (all states except NY), and by The Penn Insurance and Annuity Company of New York (NY only). Coverage may not be available in all states. Issuance of coverage for Term Life Insurance is subject to underwriting review and approval. Please see a copy of the policy for the full terms, conditions and exclusions. Policy obligations are the sole responsibility of Vantis Life.
All sample pricing is based on a 25-year old F in Excellent health for the coverage amount shown. All samples are for a 10-year term policy, unless otherwise stated. Term Life Insurance policies (Form ICC16-VLT, ICC19-VLT2, and CMP 0501 with state variations where applicable) are issued by Vantis Life Insurance Company (Vantis Life), Windsor, CT. Coverage may not be available in all states. Issuance of coverage for Term Life Insurance is subject to underwriting review and approval. Please see a copy of the policy for the full terms, conditions and exclusions. Policy obligations are the sole responsibility of Vantis Life.
A.M. Best uses letter grades ranging from A++, the highest, to F, companies in liquidation. Vantis Life’s A+ (Superior) rating, which was reaffirmed in April 2020, ranks the second highest out of 16 rankings. An insurer’s financial strength rating represents an opinion by the issuing agency regarding the ability of an insurance company to meet its financial obligations to its policyholders and contract holders and not a statement of fact or recommendation to purchase, sell or hold any security, policy or contract. These ratings do not imply approval of our products and do not reflect any indication of their performance. For more information about a particular rating or rating agency, please visit the website of the relevant agency.
Plan like a parent. is a trademark of Fabric Technologies, Inc.