I was talking with my mom and she was shocked to discover that my only life insurance came from my employer. It covers 1.5 times my annual salary (death benefit of about 90k). I rent. I'm 26. I have no children. My funeral plans (I do have a will) amount to a wake followed by a cremation, and I have one outstanding debt, a student loan for about 9k. She was concerned about what would happen if something should happen between jobs, which I suppose is a legitimate concern. I had originally planned to get some life insurance only after I get a home. What are your thoughts?

I bet you could get a small life insurance policy from your auto insurance carrier where the multi-line discount would pay for the policy in it's entirety. If so, take the free lunch.

I'm in the same position, except for being a few years older. Everything I've heard says "no." Though Mossy's point about the multi-line discount is worthwhile.

I don't think you need it.

However, you might find out how much a $1M policy would cost -- now and to renew. Perhaps compare it to someone here in their 30s. If you are keen on buying a home, getting married or having children, you will eventually need insurance. It may be much, much cheaper now.

Where do you want to be long term? Will you ever get married, have a family? Are you out of debt, have a lot of free cash flow?

Consider those questions before you answer the life insurance question. The older you get, the higher the rate. Will it change much between now and another year older? Probably not a lot. But you can lock in rates now for the long term.

Regarding the "lock-in" idea -- from my non-expert reading of insurance policies, here's what happens when you get a life insurance. They look up a chart for your health that says for each age, your premiums would look something like this:

20-24 = $100
25-29 = $125
30-34 = $150
35-39 = $175
40-44 = $200
45-49 = $225

So if you decide you want a 30 year policy, they add up all the annual payments and then divide by the term to get a fixed premium amount. Using the above table, a 30 year policy would have an annual premium of $162.50. Sounds like you've locked in a lower amount right? Well that's actually due to the trickeries of math. Say you are 20 and you finally get married at 30, that's 10 years of unneeded coverage you were paying for. For a more fair comparison, you would choose a 20-year policy at age 30 -- that would have annual premiums of $187.50. While that's a higher per period amount, the overall costs are lower because you did not have to pay for premiums from age 20-29.

Now there is a lock-in factor for health. If you have a family history of chronic medical problems developing, getting insurance coverage earlier is probably a good idea. Overpay for unneeded coverage to avoid changing health status from affecting future coverage.

Oh... this is important. People don't usually mention it.

I don't think it applies to me (I won't have kids), but it's an important consideration for some.

Can you not just get a policy then, and let it lapse if necessary?

I have no plans for children, nor does my partner. Provided we can stay in the US we'll likely get a home. If that happens, I'll definately get a policy. For now I'll look into what kind of change there will be in the near term. If there's an unreasonable increase perhaps I'll head it off at the pass that. Also I'll look at tacking it onto my auto/renters policies.

I'm also curious about this. I'm 23, single, renter, no kids, no debt. Parents take care of themselves. I have a life insurance policy from my employer, 2x my salary. Do I really need more? I thought life insurance is to take care of your loved ones when you're gone?

It could be there to prevent your family (parents) from owing money you owe. It could be there to help them in old age, if you were planning to support them (physically or financially).

Why would parents owe money you owe, unless they cosigned for you?

The idea of getting life insurance to care for your parents seems...very backwards to me.

At least in America my understanding is that your debt is retired with the assets of the estate. Ergo parents wouldn't have to pay any debt (at least out of their pocket) that wasn't theirs.

The idea of supporting parents would be valid. I don't think they need me, but I may get some coverage all the same.

That's why I have insurance. It's 2X my salary, which isn't a lot, but that would be enough to cover my student loan balance and still give my father a hefty chunk of change towards another home in retirement.

Unless somebody else cosigned your loans, your student loans will expire with you.