If you’re single with no children, life insurance might be the last thing on your mind, but it could provide a valuable financial lifeline if you've got outstanding debts such as a mortgage or credit cards to pay off.
One of the main reasons people take out life insurance is to provide financial protection to family members they leave behind. This is typically partners or children, who might struggle without their income.
However, even if you don’t have a partner or children, you might have other people in your life that are financially dependent on you. This could include family members or close friends. Here we explain exactly how single life insurance works, who might need it, and what the best alternatives are.
You might have outstanding debts such as mortgage payments, credit cards or loans. A life insurance policy could be an option for clearing these debts if you were to die.
Single person life insurance could be a sensible option for many. It could financially help anyone you leave behind and cover any outstanding debts you have, although it might not be right for everyone.
Do I need life insurance if I’m single?
Life insurance is a policy that provides peace of mind and financial help when you die. It isn’t right for everyone and if you’re thinking about buying it you should carefully consider if it’s the right kind of insurance for you.
The type of policy you buy, or if you need it at all, depends on your circumstances.
The following questions are a good place to start if you’re unsure:
- Is anyone financially dependent on you?
- Do you have any children you want to leave money to?
- How much money do you owe, to a mortgage and other lenders?
- Could your funeral costs be covered or do you want to leave money for it?
- Would you like to leave money to a charity or other organisation when you die?
These questions should give you an idea about whether life insurance is right for you. Of course it’s not the only insurance policy you could buy.
There are also products like critical illness cover, which would provide money if you were diagnosed with a specific illness. Or income protection insurance, which could cover your income if you weren’t able to work. These policies might arguably be more important to you if you’re single, as you might not have another income to fall back on if you’re unable to work.
What about life insurance for single parents?
The decision over buying life insurance becomes easier if you have children. Life insurance for single parents, for example, could cover any children they leave behind if they die.
There are around 1.8 million single parents in the UK and they make up nearly a quarter of families with dependent children, according to the charity Gingerbread. And around 90% of single parents are women.
In situations where a single parent is the main breadwinner, life insurance could be an important investment in a family’s future. While it might seem like an extra or unnecessary expense to some, it’s vital to cover any regular payments if the parent were to die.
This could include
- Mortgage or rent
- Household bills
- Childcare costs
- Holidays, clothes, trips, and school fees.
Single parents might already have a plan in place to protect their child or children if they were to die, but life insurance could be worth considering. There are several different types so it’s important to research the market fully if you're considering buying one. This ensures you have a policy that works for you and one at a reasonable cost.
What are the benefits of life insurance for single people?
There are several benefits to having single life insurance. Arguably one of the main reasons people buy it is for the peace of mind of knowing that when you die your financial dependents should be provided for. Or, any outstanding debts or payments you owe could be covered. Here we look at some of the main benefits to taking out a policy.
Protection for your children
If you have a child, or children, you might want to consider what would happen to them if you die. A single life insurance policy could provide financial assistance to them and this gives you the peace of mind of knowing they’re protected financially. This money could go towards their everyday costs, driving lessons, or even university fees.
Financial help for family members and friends
It’s not just children who could benefit from life insurance money. Any family member or friend who’s financially dependent on you could get the money. This might be an elderly parent, a close friend, or even someone who has acted as a guarantor on a loan for you. The money is paid out to them on your death, as long as you’ve named them as a beneficiary in your policy.
The cost of life insurance depends on several different factors including your age. Typically the younger you are when you take out a policy, the cheaper it should be. This is because as you get older your risk of making a claim on a policy increases. So if you’re thinking about buying life insurance, it might be better to buy a policy sooner rather than later.
Paying off a mortgage
If you have an outstanding mortgage and you die suddenly, a mortgage life insurance payout could cover the remaining amount. This means you could then leave the entire property to someone else. This might be a family member, friend or a charity. If you don’t have a life policy in place, your mortgage provider could try and get the remaining money from your estate. If there’s not enough money it could demand the property be sold and add interest charges.
What life insurance for a single person can I get?
You can buy any type of life insurance you want as a single person. In fact the only policy you wouldn’t be able to buy, as the name suggests, is a joint life insurance policy. This is for two people, although these can sometimes be taken out with business partners.
These are the main types of life insurance policy to choose from:
- Level term life insurance: You decide how much cover you need with level term life insurance and over what period you want to cover. This is often a sum to cover any expenses you usually pay for, such as mortgage payments. The period can be until your youngest child turns 18, or older if you want to cover university fees too. If you die at any point within this term, the set amount of money is paid out.
- Whole-of-life insurance: One of the most expensive life insurance policies to buy because it lasts for the policyholder’s lifetime. At any point during your life, it pays out a sum of money when you die.
- Decreasing life insurance (also known as mortgage insurance): Usually decreasing life insurance is taken out to cover mortgage payments. The amount paid out decreases over time, as more money is paid off a mortgage. These policies tend to be cheaper because the overall amount of money paid out by an insurer is lower.
How can I get single life insurance?
Buying single life insurance is a relatively straightforward process. Once you’ve decided what kind of life insurance you want, you then need to look at how much cover to include. We have a free life insurance calculator to help you work out how much you might need.
You can then start looking at insurers and policies. Using our comparison service is an easy way to compare life insurance policies in one place. All we need is a few details about you and the policy you want, and we’ll show you quotes from a range of providers.
Start a life insurance quote
It’s important to take the time to compare the details of a policy along with the price on offer to make sure you find one that’s right for you.
Should I take out single or joint life insurance?
The difference between single and joint life insurance is that with joint life insurance, there’s only one payment made on the first policyholder’s death. With single life insurance there’s a payment when the policyholder dies.
If you’re trying to decide between joint or single life insurance, take a look at the pros and cons of each.
Joint policies could be cheaper than two single policies, because only one payout is ever made by the insurer. However, this also means there’s less money left behind. If two people take out a joint policy - they don’t need to be in a relationship to do so - one payment is made if one dies. After this point the policy ends.
Let’s say those same two people take two single life insurance policies out. A payment is made when each dies, as long as the policy is still in place. This option potentially offers more money to those left behind to cover their payments.
Do I need single person life insurance for a mortgage?
When you buy a house and take out a mortgage, you might also consider buying a life insurance policy. This could cover your mortgage payments if you were to die before the mortgage is paid off.
If you don’t have a policy and still have mortgage payments to make, a mortgage provider can seek the money to cover these payments from your estate.
They could also demand that the property is sold, and charge interest. If the home is worth less than the outstanding loan balance, the lender has the right to demand the difference is also made up from the estate.
However, they can’t demand money from surviving friends and family members to pay for this.
Do I need single person life insurance if I don’t have a mortgage?
If you don’t have a mortgage, a life insurance payment can go towards friends, family members, or anyone else who is dependent on you financially. If you want to leave an inheritance to someone, or even an organisation such as a charity, life insurance money could also be used.
If you have debts such as unsecured loans and credit cards these will be treated in the same way as a mortgage when you die. They must be paid off out of the deceased person’s estate.
A life insurance policy could be bought to ensure they can be repaid. Student loans are cancelled on the borrower’s death under current rules.
Can I take out single life insurance to leave an inheritance?
Life insurance could also be used as a way to leave an inheritance to families or friends. This could be instead of leaving a property or other assets behind.
A life insurance policy means that an inheritance is left to children or grandchildren, or anyone you put down as a beneficiary.
If you’re setting up a life policy with the intention of it paying out an inheritance, you should consider writing your life insurance policy in trust.
This is free, apart from any legal fees you might have to pay, and is a way to protect your money from inheritance tax.
When you set up a trust, which is basically an arrangement for a trust to look after your policy, it becomes ring-fenced from the tax office. Payments from the policy are then not included in your estate for inheritance tax purposes.
The payout also avoids having to go through the probate process with the rest of your assets, which means your family is likely to get the money much more quickly.