There are a few times in my life where I distinctly felt like an “adult”: when I closed on my first mortgage, maxed out my 401k at my new job, and the day I bought term life coverage. But long before I ever signed on the dotted line for that policy, I asked myself many times whether I actually needed life insurance.

It’s a question that you may have also asked yourself throughout your adult life. As you progress in your career, get married, have children, build assets and assume or pay off debt, it’s a consideration that you need to have. Life insurance coverage can mean the difference between supporting your loved ones in your absence, and leaving them with a financial burden. So, how do you really know whether it’s time to buy a life insurance policy?

Let’s take a look at some reasons that you may want to consider purchasing coverage, and a few scenarios in which you might consider alternatives.

Others Depend on Your Income = Yes

If you have a spouse, children, or family members who rely on your income, life insurance should be a strong consideration.

Take into account exactly how much others rely on your salary. Are you the sole breadwinner for your family? Do you take care of your aging parents? Maybe you and your spouse have children (even if you’re a dual-income family), and you want them to maintain their current quality of life. These are all great reasons to buy a life insurance policy.

Figuring out exactly how much life insurance to buy depends on many factors. However, if your loved ones would be burdened by the loss of your income, you should certainly look into term or whole life coverage. Things about the things you would want to provide for them – such as covering everyday expenses, paying off the mortgage, providing monthly health insurance coverage, or funding future college expenses – and then determine your policy size.

If loved ones would be financially impacted by your lost income, life insurance should be a definite yes.

Your Estate Would Owe Money = Yes

If you have significant debt – in the form of student loans, credit card balances, personal loans, or even the aforementioned mortgage – life insurance is a very wise choice. This will prevent your estate from being depleted by creditors, and will protect your family’s financial assets.

This is particularly true if others are attached to the debt. If your spouse is a joint account holder on a credit card with a high balance, for instance, they will still be on the hook for the entire debt after your death. This could be a serious financial burden for them, impacting your family for years to come.

If you have federal student loans, these will be cancelled and discharged following your passing. However, private student loans don’t usually come with the same benefit. If you are still paying off private loans from college, there’s a chance that the lender could come after your estate for the balance. If a parent or spouse co-signed on the loans, the financial responsibility will often be shifted entirely to them.

Even more impactful? The death of either the borrower or co-signer can trigger a loan default with some companies. This means that even if you’ve always made payments on time, the lender can force the remaining responsible party to pay up in full, and immediately.

This would likely have a catastrophic financial impact. Buying enough life insurance coverage to pay off private student loan balances – and spare your co-signers’ livelihoods – is important.

You Want to Improve Your Loved Ones’ Lives = Yes

Perhaps your family is doing alright financially. Maybe you’re single or your spouse has a great career, you don’t have any kids, your savings account is fairly healthy, and you wouldn’t be leaving behind any debt. Is there still any reason to buy life insurance?

Perhaps. One reason that some people buy life insurance policies – even if family wouldn’t be financially burdened by their passing – is to improve loved ones’ quality of life.

Obviously, your family would be emotionally distraught by your loss. But even if they had the means to financially move forward without too much impact, it might be nice to provide a more comfortable life for those you leave behind.

This can easily be done with a life insurance policy. You could purchase modest coverage to improve your family’s quality of life for a while, or a significant policy to provide wealth for future generations. It’s a popular choice, too: a 2017 study showed that a whopping 63% of Americans with life insurance purchased their policies in order to leave an inheritance or transfer wealth.

Funerals are Expensive = Yes

At the height of your family’s emotional suffering, they will be faced with some painful (and very expensive) decisions. Unfortunately, these decisions must also be made, and paid for, immediately following your death.

The average funeral today costs between $8,000 and $10,000. If you live in a high-cost area or if your family has certain requests, the cost can quickly climb. And since many Americans pass away unexpectedly without paying (or even saving) for their funeral expenses, the bill lands in the hands of family members left behind.

Even if you are single and don’t have dependents, debts, or other notable reasons for buying a life insurance policy, it’s a great idea to purchase a small one to cover your funeral. A small policy for $8,000-$12,000 doesn’t cost more than a few dollars a month, and will spare your loved ones a financial burden following your passing.

You’re Single = Maybe

Perhaps you’re reading all of this and thinking,”I’m single. I don’t have kids and I don’t have debt. I even have savings that would cover my funeral! There’s no reason for me to buy life insurance.” Well, depending on your family, it might still be worth considering.

As mentioned above, life insurance can be a great way to improve the quality of life for those that you leave behind. Maybe your parents have always wanted to tour Italy; a small life insurance policy could send them on the trip of a lifetime, and provide some joy during a very sad time in their lives.

You can use life insurance to provide for others outside of your immediate family, as well. Your policy could be used to establish a scholarship fund for deserving students. If there’s a charity that’s near and dear to your heart, your life insurance policy could make for a much-appreciated contribution to their cause.

You’re Wealthy = Maybe

If you’re already financially secure, life insurance may or may not be warranted. It really depends on your purpose for the policy, and just how secure your finances are.

Life insurance can still help your family adjust to a loss of income. Even if you have healthy savings, the initial impact can still be significant, and a life insurance policy could allow your family a buffer in the beginning. Plus, it could also be used to provide for others, as mentioned above, through an endowment or charitable donation.

However, if you feel that your finances are secure enough, your funeral expenses are covered, you have no outstanding debts, and your dependents don’t really rely on your income, life insurance may not be necessary. The money that you would be putting toward premiums could simply be put into savings.

You’re Retired = Maybe

If you have already reached retirement, you (and your spouse) may be in a fairly comfortable place. Hopefully, you’ve saved enough over the years to live out your days in financial security. Plus, your children are likely grown, and don’t depend on your income anymore.

Depending on your retirement funds and other assets, a policy could still be used to provide an inheritance to your family or even just cover funeral expenses. Life insurance could provide a buffer against drawing down savings too early. However, it’s certainly not as “necessary” as it was when you were younger.

Unless your retirement funds are tight and you worry about your spouse’s ability to be financially secure for years to come, life insurance after retirement is a matter of preference rather than priority.

Do I Need Life Insurance?

The issue of whether you need life insurance really comes down to one question: would your passing cause a financial pinch for those left behind? If the answer is yes – due to loss of income, funeral expenses, abandoned debt, etc. – then you should absolutely look into purchasing a policy.

If you are a parent, have a spouse who is dependent on your income, or have debt balances (such as a mortgage, credit card bills, or student loans), life insurance should be a priority. The last thing you want to do is leave your loved ones in a bind.

There’s also the potential of buying life insurance out of desire, not necessity. Maybe you want your entire family to sail the world in your honor, and a policy would provide funding. Perhaps you want to send your nieces and nephews to college, leave an endowment to your alma mater, or give your loved ones a boost in their quality of life. While these don’t create a “need” for life insurance, they are still worthwhile (and popular) reasons for buying a policy.

Life insurance isn’t necessary for everyone. However, it’s a great way to provide for those you love in the event of your passing, no matter the stage of life you’re in.

If you want to learn more about coverage, decide whether a policy is right for you, and even get a free quote, please contact our licensed life insurance coaches.