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Even if you have no dependents, you may still need life insurance if you don’t have enough in your estate to cover all your end-of-life expenses.
Published on: September 18, 2024 | Reviewed by Catherine Malone
Many people see life insurance as a way to financially protect their spouse and children. This is certainly true, but did you know life insurance can also benefit single people? Here are some key reasons to consider getting coverage if you’re single:
1. Pay off end-of-life expenses
When you die, almost everything you own – money and belongings – becomes part of your “estate.”
In some cases, your estate may be probated. Probate is the legal process where the court gives the executor the authority to administer a deceased person's estate. As part of this process, the assets in your estate may become subject to probate tax. The amount of probate tax varies across the country.
Before anyone can inherit the funds in your estate, this money must be used to pay off remaining debts, final taxes owed, probate fees, funeral costs, and more. Keep in mind, the amount of taxes you owe upon death depends on several factors, including your annual income. And, funeral expenses in Canada can range anywhere from $5,000 to $10,000 or more.
However, the money paid from a life insurance policy at death (called the death benefit) isn’t part of the estate if it’s paid to a named beneficiary. If the estate is probated, the death benefit won’t be part of the estate, and any probate fees the estate pays will be lower. Having a solid life insurance plan can help ensure there’s enough money to pay for end-of-life expenses. This way, you don’t have to rely on your estate or your beneficiaries to cover those expenses.
2. Leave money to family or dependents
Many single people have caregiving responsibilities. You may be a single parent, or you may have aging parents, sick family members, or other dependents who rely on you financially. In such cases, life insurance can help financially protect your dependents when you die. You can name your loved ones as beneficiaries and they can use the money from the death benefit in any way they please.
3. Leave money to a charity or organization
If you’re active in philanthropy or a specific cause, you can use life insurance to support a charity or organization by naming them as your beneficiary. Remember, you also have the option to select multiple beneficiaries, thereby splitting the death benefit between different people and organizations.
4. Leave money to your business
Life insurance can help your business protect itself financially if you, your business partner(s) or any essential employees die. Your business can own a policy on your life or the lives of your business partner(s) and essential employees. You can also buy business owner insurance, which offers a combination of life, health and disability insurance to help protect your business.
Frequently Asked Questions
If you don’t have children, you may still need insurance to cover other needs. For example, you may want to provide a fund to cover your end-of-life expenses, like the cost of a funeral and other associated costs (burial plot, probate, legal fees, etc.), and to clear any debts you may have at death. If your parents are nearing an age where they could need long-term care, you may want to leave something to help care for them if you die before them. Life insurance can also provide the money needed to care for a cherished pet after you’re gone. You can also use life insurance to leave money to your favourite charity or charities at your death.
The cost of life insurance varies for everyone, regardless of their marital status. It depends on several things, including your age, health status, sex at birth, and whether you smoke. But generally, if you’re young and healthy, your fees (also called premiums) will be lower. Depending on the type of life insurance product you buy, your premiums can renew at a higher rate or remain the same as you age.
Learn about the two main types of life insurance: term life insurance and permanent life insurance.
There’s no one-type-fits-all life insurance plan for people who fall into a specific demographic. The type of life insurance that’s right for you depends on your specific needs.
To find out what type of plan is most suitable for your needs, connect with a Sun Life advisor. Our advisors can assess your goals and needs to help you develop a personalized plan. They can also answer any questions you may have.
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This information is meant for educational and illustrative purposes only. Some conditions, exclusions and restrictions apply. Sun Life does not offer any legal, tax, or accounting advice.