15 Kinds of People Who Most Definitely Need Life Insurance

INSURANCE - LIFE INSURANCE
From single parents to business owners, see who should prioritize life insurance today.
Updated May 8, 2024
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You may not need life insurance if you’re very wealthy, without any dependents, or don’t want to leave money to your heirs. 

Most others, however, have a genuine need for life insurance. You want to ensure your family can maintain their quality of life if something unexpected happens to you.

You’ll need to choose the shop for the best life insurance and select enough coverage to meet your needs to make these policies worthwhile.

To determine if you need life insurance, see if you fit one of these categories.

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Business owners

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If you own your own business, what would happen to it if you suddenly were no longer at the helm? A life insurance policy could help fund your business’s needs until they can find a replacement for you.

Some types of permanent or whole life insurance policies could provide your family with the financial support they need if your business also has to shut down.

Breadwinner

Feodora/Adobe man on call under cash rain

Anyone who’s the breadwinner in a household should have life insurance. Without it, a tragic event would mean your family would no longer have the income they rely on.

If anyone in your household, or any other area of your life, depends on your income, life insurance helps to ensure they can continue to receive that support on an ongoing basis.

Parents of children with special needs

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As a parent of a child with special needs, consider how your child would be cared for without your presence. Even if a family member could provide help, that doesn’t mean they can afford to offer the same level of care and support you give now.

If you are a stay-at-home parent to your child with special needs, there’s still a very real need to have life insurance to help cover that child’s care if something were to happen to you.

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Stay-at-home parent

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It’s a misconception that a stay-at-home parent doesn’t contribute financially to the household. If there are young children at home, how much would your partner have to pay for childcare if you weren't there to provide it?

Stay-at-home parents contribute to the household itself, making them a valuable component in financial terms.

Seniors without significant savings

Андрей Журавлев/Adobe hands showing empty wallet

If you’re older and don’t have a significant savings account, consider the value of a life insurance policy that could cover your funeral costs and final arrangements. That would alleviate the financial strain on your heirs, too.

Consider the cost of final expenses and then seek out a policy to cover them. Final expense insurance policies tend to be available to those over 50 and offer competitively low rates for their limited coverage.

Charitable giver

momius/Adobe finger clicking make donation key

If you intend to leave money to a charity or other organization that is important to you, consider using a life insurance policy. 

You can name the charity as the policy beneficiary, or if you want to maintain more control, you could set up a trust for the death benefit.

A trust is a legal strategy that will allow you to place controls on the funds even after your death. You establish the trust, the administrator of it, and the rules for accessing those funds. This is one of the most effective ways to support organizations or specific programs important to you.

Mortgage holders

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If you have a mortgage in place now, consider what would happen to your family if you were to pass away unexpectedly. The death benefit from the life insurance policy could help pay the mortgage off in full, allowing your family members to remain in the home.

Without this, it may be difficult, if not impossible, for your loved ones to continue to maintain the home’s loan payments without your income.

Single parents

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A single parent is usually the sole support of their child. If a catastrophic accident were to occur, how would the child live? 

While you may have designated a relative to become the guardian for your child, a life insurance policy will ensure they have the financial support necessary to care for your child.

You can fund a trust with the proceeds from a life insurance policy like this, limiting how the funds are used and who can make decisions for your child.

Debt holders

Shisu_ka/Adobe stressed businessman choosing card for bills

If you’re unmarried and don’t plan to leave money for your loved ones, and you carry debt, no one else would be responsible for paying off that debt unless they are a co-signer or joint account holder.

For most people, however, that’s not the case. To protect your assets and preserve your estate for your heirs, consider the value of life insurance. It could pay off your debts, freeing your heirs from having to make those continued payments.

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Parents of college students

Keitma/Adobe african american family moving to dorm

Your college student may not be living at home with you full time, but they likely still depend on you financially, especially if you pay the tuition.

Your life insurance policy could fund their college education or help pay off their existing college debt, allowing them to have a financially easier start to life.

Grandparents with goals

Miljan Živković/Adobe senior man cheering outside new house

You may have grown children who are financially set, and your debts are paid off, but having a life insurance policy could still be critical if you have goals for your grandchildren, whether they're born yet or not.

This policy may help cover the costs of funding their college education, leaving something for them to start a business, or even help them buy their first home, depending on how generous you wish to be.

Diversification seekers

tadamichi/Adobe investor preparing colorful pie chart

A whole or permanent life insurance policy may be a way to help diversify your portfolio, giving you something to support your financial needs into retirement if your other strategies don’t work out.

Some whole life insurance policies have financial tools that allow you to receive dividends during your lifetime, and some allow you to borrow from them when times are tough.

Significant asset holders

Rawpixel.com/Adobe notebook having assets written over page

As an asset holder, your family may be forced to pay estate taxes at the time of your death, and that can slash mercilessly into their inheritance.

With a life insurance policy, they can use the death benefit to help cover many of these losses, allowing them to recoup those costs since life insurance isn’t taxable income.

Debt holders with co-signers

Ivan/Adobe businessman signing contract at work

Do you have a personal, car, or student loan that someone else has co-signed? Then, you need life insurance.

If you die or default on the debt, that other party is responsible for your debt. That could be financially taxing for the co-signer.

Single and young individuals

Camerene Pendl/peopleimages.com/Adobe attractive woman shopping at boutique

You’re young, and thinking about death is the last thing on your mind, but life insurance at a young age could be critical to building financial wealth. 

Purchasing life insurance young, especially a whole life insurance policy, could significantly reduce your costs later in life.

You can maintain that policy long-term, building cash value during your lifetime, and may even help you retire early.

Bottom line

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Life insurance is a valuable investment for most people, not just parents or business owners. The best way to know if you should consider it is to think about what would happen if you were unable to continue to meet your family’s financial needs.

Retirees can benefit from a life insurance policy even if their children are on their own. It may provide for funeral expenses, money to help your heirs in school, or simply provide peace of mind for your finances.

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Author Details

Sandy Baker Sandy Baker is a has over 17 years of experience in the financial sector. Her experience includes website content, blogs, and social media. She’s worked with companies such as Realtor.com, Bankrate, TransUnion, Equifax, and Consumer Affairs.

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