Should single people consider life insurance?

September 12th, 2022
Should single people consider life insurance?

Many people see life insurance as something that is only important if they have a family who depend on them, but actually there are many reasons why a single person could benefit from a life insurance policy.

Young Person

For a young person, who is perhaps leaving university and setting up home for the first time, either on their own or with friends, taking out a single person life insurance policy will be the cheapest it ever will be, and subject to the terms and conditions of the individual policy, could also continue to provide cover at the same price should they meet a partner and start a family during the term of the policy.

Until such time as the young person starts their own family, the life insurance policy would also provide peace of mind that should the worst happen, their parents or other loved ones would not be left with a financial burden as a result, as the life insurance policy would cover the cost of any outstanding debts, including student debt, and would also pay off the mortgage on a property if they had purchased a house, either on their own, or with a friend.

Single Parent

Personal life insurance is an important consideration for a single parent as they are wholly responsible for their child or children, and should they pass away, the children may not have the security of a second parent or other relative who will be able to provide them with the same lifestyle that they are accustomed to, especially if their home has to be sold to pay off the mortgage or any other debts. Even with no debts, raising a child comes at a high financial cost and many single parents would be wise to consider the value that they should set the policy payout at in order to ensure that their children would be financially secure should they no longer be around.

Taking out a life insurance personal policy as a single parent means that if you were to pass away during the term of the policy, your children and other loved ones would not have to find the money to pay bills, mortgages or to settle any outstanding debt. This provides peace of mind, knowing that your children would be financially catered for and that whoever was nominated to care for them would not be left with unaffordable bills to manage at an already stressful time.

Equally, if you are embarking on a new relationship and already have children from a previous relationship, you may consider whether to take out a joint or single life insurance policy. There are benefits to both types of policy but if your primary motivation for taking out a life insurance policy is to ensure that your children will have the financial security they may need should you no longer be with them, a single premium life insurance policy will allow you to nominate them as your dependants, rather than your partner, ensuring that your children will not be financially disadvantaged by your new relationship should you pass away.

Having a single life insurance policy also means that your children are guaranteed a payout in the event of your death, as with a joint policy, the payout only occurs on the death of the first person covered.

Caring Responsibilities

A single person may not have children of their own, but may still have responsibilities for others who would suffer should they no longer be around, and this may be their motivation for taking out a life ins policy. They may be responsible for or involved in supporting their parents, grandparents, nieces, nephews or godchildren and in the absence of anybody else to undertake their caring responsibilities, feel the need to guarantee that those people would not be financially disadvantaged or their care suffer should the single person providing the support die.

In instances such as this, it is vital that the payout amount is carefully considered, taking into account the individual circumstances and the level of support that is provided, as not only is there a financial consideration in cases such as this, but the time that the single person spends caring for others would have to be paid for should they no longer be able to do it and an employee or professional carer hired to handle it in their place.

Business Owners

Single people who own their own business, either as sole traders or those in a Limited Liability Partnership would be wise to consider life insurances. In many cases, having a valid life insurance policy is a necessary prerequisite in order to take out a business loan and your lender would need to be nominated as a beneficiary in the event of your death, to guarantee that the loan would be repaid.

Business owners who pass away leave a gaping hole in their business structure and this could even result in the collapse of the business. Having a life insurance policy would allow time for the business to stabilise and for any business partners or financial beneficiaries to decide what to do with the business, continuing to run it and paying off any outstanding debts without the time pressures that would ordinarily be associated with such decisions.

Covering Funeral Expenses

Even if a single person has no debts, mortgages or other outstanding financial commitments, somebody would need to pay their funeral costs should they pass away, and with the average funeral costing over [1] £4000, this is a consideration for many single people, especially if they do not have significant amounts of savings and would not wish for their parents or other family members to be financially disadvantaged in the event of their untimely demise.

Leaving An Inheritance

One reason that many single people take out a life insurance policy is to leave an inheritance for their loved ones. This may not be their child or partner, but could be parents, friends, or other family members such as nieces or nephews. If insurance for life is taken out for this purpose, it is wise to consider the inheritance tax implications of this decision and to write the policy in trust in order to keep the payout separate from other elements of the estate.

In the event that you are considering taking out a life insurance policy for this purpose, it is highly recommended that legal advice is sought to ensure that all necessary considerations and implications are understood and the best decisions made to simplify proceedings downstream.

Citizens Advice [2] recommends that if you have clear preferences for who your beneficiaries will be in the event of your death, that you should also write a will to ensure that your wishes are clear, legal and will be carried out.

Life Insurance Options

As per any other life insurance policy, your options for taking out a policy as a single person are:

  • 1) Level term. This guarantees a fixed amount of money for a fixed amount of time so is a good choice for someone who takes out a policy when they are young and single but plans to settle down and start a family in the future. This type of policy will only pay out if you die during the fixed term.
  • 2) Decreasing term. This type of policy is predominantly designed for people with a mortgage as the payout decreases over the time, in line with the decrease in the outstanding mortgage amount. As with a level term policy, this policy will only pay out if you pass away during the term of the policy.
  • 3) Whole of life cover. This type of cover will cover you for the rest of your life, regardless of how your situation changes, provided that you keep up your monthly payments. This is typically the most expensive type of cover available but if you buy your policy when you are young, your premiums will likely be lower than if you take out the same policy later in life.

Deciding On The Policy Payout Amount

Determining the value of a life insurance policy depends on your individual circumstances. As a bare minimum, you need to value your debts and financial commitments to ensure that should you pass away, these will be paid off without leaving friends or family in a difficult financial position. This is particularly important if you are a co-signatory on a debt or in a business partnership, to ensure that the person or persons you are in partnership with will be able to manage financially if you were no longer there to pay your share.

If you have children who will need to be cared for, you should consider the financial value of that care until at least such time as the youngest child turns 18. This should include the basic essentials such as food, clothing and other necessities but you would also be wise to consider whether the person who would care for them in the event of your demise would need to reduce their working hours or stop working entirely in order to care for them, in which case their income would need to be replaced by your life insurance payout in order to guarantee that they would not experience financial instability due to your passing. This consideration should also determine whether you would want the policy to pay out in a lump sum or as a monthly income.

You should also ensure that the value of the life insurance policy is affordable – if you cannot afford to make the monthly payments, then you should consider whether the payout amount that you have set is too high. If you are struggling with debt and considering a life insurance policy as a way of ensuring that your dependents or loved ones will not inherit your debt in the event of your death, you could consider tackling the debt now. There are many organisations who can help you for free, such as the [3] Money Advice Service who have been set up by the government to help UK citizens to tackle money issues, providing support with financial management, benefits entitlement and debt management and support.


There are many situations in which a single person could benefit from taking out an insurance life policy and there are several key considerations that they should take into account in deciding which policy best suits their individual circumstances and offers the best value for money long term. Once they are content that a life insurance policy is the right choice for them, and they have decided which type of policy is best for them and calculated a sensible payout value, then we recommend [4] comparing a variety of options to ensure that the selected policy offers all of the security that they need as well as providing value for money.

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