Some financial advisors do not recommend life insurance for single people without dependents. I agree that life insurance may not be the most relevant financial protection product for a young, single person without dependents. However, I also believe that change is constant. As such, a person who fits the profile in question may need life insurance in the future. Also, insurance is not the type of product that you can purchase whenever you can afford it. Therefore, it might be a prudent to acquire adequate life insurance while you can. The following are the most important reasons why a young, single person should acquire life insurance now:

1) Affordability: When you are younger, the premium rates for life insurance are lower. This reflects the lower risk posed by younger people based on the concept of life expectancy. However, it wouldn’t make sense to purchase it simply because it is cheaper now. Any purchase or investment should have value to the customer. If there is the slightest chance that life insurance may be valuable in the future, purchase it now.

2) Insurability: This refers to the likelihood that an insurer will accept your offer to be insured. Insurers have the choice of accepting your offer as it is, increasing your premiums due to elevated risk or denying your application if you are deemed uninsurable. If you defer purchase of life insurance, there’s a chance that your offer may be rated or denied. To wait until you’re older is to gamble on your insurability.

3) Cash values: With cash-value life insurance plans, you would accumulate far more at an earlier age if you take the life insurance plan earlier. For example, with a Universal Life plan, the savings portfolio would be working for a longer period if you start earlier. You would benefit from compounded interest and be able to have high cash values available at an earlier stage in your life.

4) Forced savings: Quite a few young people are notoriously irresponsible with their finances. Purchasing cash-value life insurance for the young, single person is one way of ensuring that the act of saving takes place at that juncture. Universal Life plans are the best type for forced savings, since they typically have an independent savings plan embedded in them.

5) Business/ mortgage purposes/ estate planning: Life insurance is not only for dependents that you do not have as yet. Life insurance plans are sometimes necessary for business transactions and mortgages. If you plan to be single without dependents for life, you may still need life insurance for purposes such as these. It is never too early to begin estate planning either. Life insurance both creates an estate and protects what you have already. So if you acquire dependents later on, your estate would already be secured for their benefit.

The best type of life insurance for a young, single person to purchase would be a cash-value life insurance plan. This is primarily because cash-value life insurance plans would enable forced savings. A Universal Life plan with its savings portfolio attached would be a meaningful addition to your financial pyramid. A useful coverage level would be at least five times your annual salary as a young, single person. It is primarily uncertainty about the future that forces us to be prudent. More times than not, it would make sense to buy life insurance now if you are young, single and not clairvoyant,

There are three major elements to consider when purchasing an individual health insurance policy. The first is the deductible, the second is the coinsurance and the third is what is covered and what is excluded.

1. Deductible- This is the first dollar out of your pocket when paying for your health care. The insurance company does not pay dollar one until your deductible is met. The only exceptions to this may be the doctor’s office fee for a physical exam or lab work which may be met by either plan design or additional riders. Most plans offer this fee (called a ‘copay’) as an element of the plan, but some may not. Also, most emergency room fees are NOT part of the deductible- most plans say there is typically a 50 or 100 dollar fee to use an ER (unless admitted).

2. Coinsurance- This is the amount of money out of your pocket relative to the coverage you have selected and share with the insurance company. For example, a plan that offers 80/20 coverage to 20,000 dollars means that of the first 20k in bills, the insurance company will pay 80% or 16,000 dollars- with you paying 4,000. Make sure you understand that this amount comes AFTER the deductible is met. After the coinsurance is met, usually the insurance company pays 100% until the policy maximum is met (typically 3 to 5 million dollars max). when you purchase a plan, budget how much you could afford out of pocket in the event of a major illness to decide how much coverage you should get, or if you are buying more insurance than you might need.

3. Exclusions and Riders- Make sure you understand if your policy covers both inpatient and outpatient care (a lot don’t), and if it excludes on the job injuries or illnesses. Also, does the policy cover you in the event of an accident? Or provide cash in the event of critical illness since you may have to take time off from work. A few stitched in the finger might set you back a few thousand if it doesn’t. Most policies can add riders to cover these unforeseen and common occurrences. Most cosmetic and restorative or dental surgeries are not covered either and you should be aware of these limitations. In the back of your policy there is typically an exclusions and riders section- read it thoroughly.

Also importantly, before purchasing a policy, check to see if your doctor is in the network of physicians for that plan. Does it have a prescription card? Does it offer maternity or premature death benefits? You should have a good health insurance agent go over these items and he/she should review your plan annually and make changes as necessary. A health insurance expert is a good idea to purchase your plan from, rather than your auto, home or life agent, since health insurance laws vary widely from state to state and there are many details that can be easily overlooked.

Good luck!