Don’t Have Kids? Term Life Insurance Could Still Make Sense

This piece was originally written for and published on Business Insider.

Getting life insurance is not on most people’s priority lists. It can feel like a hassle to go through the process of scheduling an exam and sharing your medical history.

The reality, however, is that life insurance can be a useful part of your overall plan to make sure your assets, your property, and the financial security of your loved ones can withstand the worst-case scenario of your sudden death.

This is especially true if you have minor children or dependents. In general, you may not need life insurance until you have someone who is financially dependent on you, because life insurance is designed to protect those individuals from financial hardship if you (and your income) were no longer here.

I’ve even used that rule of thumb myself in the past. But a rule of thumb is just that: a general guideline, a little bit of context to help you make a decision.

You still need to dig into the details of your specific situation to determine the best solution. That’s exactly what my wife and I did when we each made the decision to purchase life insurance policies, even though we don’t have children.

Why I went against the general guideline and got life insurance, even though I don’t have dependents

My wife, Kali, is not financially dependent on me. We combined our finances when we got married, so we hold many joint assets together that she would inherit if I died, and she’s listed as the primary beneficiary on my retirement accounts.

We also set up an estate plan (another critical component of a complete protection plan for your finances) to ensure we each were protected in the event that one of us was incapacitated or deceased.

It’s fair to ask, then, why we bothered to purchase term life insurance policies. There were three main reasons:

We’re young

Kali is 30 years old, and even though she would have our assets to rely on, she would need to make significant changes to her lifestyle to make them last from now until her elder years.

It provided me with peace of mind to get a life insurance policy that guaranteed she would be financially secure for the rest of her life no matter what happened to her employment.

We own a business together

And that is the second reason: Kali and I run a business together. She’s technically an employee of the business, and may not be able to perform all the critical functions required to keep the business operational if I died.

While she could try to sell the firm and generate a lump sum from the profits, it would be difficult, time-consuming, and emotionally painful to do so. She would also lack liquidity and may struggle to pay bills or meet financial obligations before a transaction was finalized.

We own a home

That brings up the third reason, which is that we own property and while, again, Kali could feasibly sell it and pay off the mortgage with the proceeds, that could take time and would be a difficult and emotional process.

But as the beneficiary of my life insurance policy, she could take the death benefit and immediately pay off the mortgage to eliminate the burden on her cash flow and invest the rest to support her long-term financial needs.

You don’t necessarily need children before you consider protection planning

The life insurance policy I have is a term life policy stretching 20 years, meaning that 20 years from now, the policy will automatically lapse (unless we renew).

At that point, we likely wouldn’t need the coverage: We would have had 20 more years of earning history, mortgage repayment, and contributions to savings and investment accounts under our belts. If something happened to either of us at that point, the other would most likely not face the same kind of financial hardship then as we would today.

Obviously, not everyone runs a business with their spouse (which is the leading reason why we both have policies with the other person as the beneficiary). But there are many, many reasons why a low-cost, term life insurance policy could provide added protection against financial struggle should something unexpected happen to you or your partner, even if you both earn incomes.

While the need for a term life policy is clear when you have children who depend fully on you for financial support, a working spouse might also need additional protection if they would find themselves hard-pressed to manage the household finances if they only had their income to rely on.

You need to be careful that you don’t buy more coverage than you need when looking at life insurance, and it’s smart to shop around to gather various quotes to ensure you’re not overpaying for premiums.

But putting the right policy in place can provide peace of mind for you and your family, whether “family” includes children or not.

Want more financial advice you can actually use? Check out Beyond Your Hammock, a fee-only financial planning firm that specializes in helping 30- and 40-somethings get clarity and start building wealth.