Life insurance as a twenty-something with no dependents

When I think of life insurance, I think of a family man working to pay the mortgage and the bills with his wife at home. I don’t think of me – a twenty-something with no dependents – as someone who needs life insurance.

One of my benefits at work is a pretty good life insurance policy, at least as far as I’m concerned.

So who is the rightful beneficiary on my life insurance policy? My parents. What better way is there to thank them for raising me than giving back a good portion of the costs they spent if I was to die in a freak accident?

Some companies allow you to see a slightly larger paycheck for reducing your life insurance policy. My company doesn’t offer that option, however, that could be a good option for you.

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5 thoughts on “Life insurance as a twenty-something with no dependents

  1. I have a nominal life insurance policy through work. I think it’s like $10,000 – it’s not much. I chose my parents as the beneficiary of that, with my sister as the back up beneficiary. I really don’t care what happens with my money if I die, so I might as well keep it in the family.

    In addition to that, my parents bought a $50k universal life insurance policy on me and my sister back in the 80s shortly after we were born. They bought this policy so that they would have $$ to bury me or my sister if something happened to us. They are the beneficiaries. Back in the 80s, this thing was making like 10% interest. The guaranteed minimum interest on the cash value of this policy for the rest of my life is 4.5%. That’s way better than any checking account out there the past few years. When interest rates go up, so will the interest on the cash value. I think we can put up to $50k cash in there too. Looking at USAA’s current rates, they’re showing that their new policies earn 4.5% NOW, but the minimum rate on those policies are a much weaker 1%.

    My parents stopped paying premiums on this thing a long time ago because the cash value has grown so much to cover the costs.

    I don’t know if it was the best use of their money, but at this point, regardless of if I need a death benefit or not, because my parents made the choices they made, I already have some life insurance on me in place for whenever I do have someone who should be a beneficiary, and I don’t need to worry about passing medical underwriting in my mid 30s or whatever. Even better that it doesn’t cost us anything to maintain the policy.

    I briefly thought about buying a 15 year term policy to cover my mortgage, should I die before it’s paid off – but I figure my family can just sell my condo if they don’t want to turn it into a rental.

    • Wow, $10,000? That’s not very much of a benefit. My policy is quite substantial, though I’m sure it wouldn’t be enough if I was supporting a family.

      I don’t really understand why parents take out life insurance on their kids. Do you understand why they would do that?

      I thought about increasing my life insurance policy to cover my mortgage when I was buying the condo, but my mom told me I was crazy and that they would just sell it if I was to die. My investments and cash savings would probably cover the difference between the mortgage balance and the amoutn they could sell the condo for any way.

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