Do I Need Life Insurance? 5 Scenarios to Think About
Wondering if life insurance is right for you? From buying a home to starting a family, see which common events might trigger the need for coverage.
Bottom Line Up Front
- Life insurance makes sense when you have financial obligations or people who depend on your income for support.
- Major life events like getting married or having children often trigger the need for coverage.
- Getting life insurance coverage when you’re younger and healthier could help you save money over time.
Time to Read
6 minutes
August 27, 2025
Big life changes—like getting married, buying a home or having a baby—can make you realize how important it is to protect the people who count on you. Life insurance is one way to help ensure your loved ones are financially secure in the event of your passing.
With coverage in place, your family won’t have to worry about money during a tough time. Life insurance can help them cover mortgage payments, everyday expenses and even future goals like college tuition.
If you’ve ever asked, “Do I need life insurance?”, a good place to start is by looking at your current situation. We’ll walk through a few key questions and 5 everyday scenarios where coverage can make a meaningful difference—so you can decide what’s right for you and your family.
5 questions to help assess if you need life insurance
Before you start thinking about how much life insurance you need —or what it might cost—ask yourself a few questions:
“Does anyone depend on my income?”
This includes more than just children. Spouses, aging parents, business partners or anyone who relies on your financial support would count.
“Would my debts become someone else’s responsibility?”
If you have co-signers, joint accounts or a mortgage, those financial responsibilities don’t go away after you’re gone. Without life insurance, your loved ones are left to cover those costs on their own.
“Do I need life insurance if I don’t have kids?”
It’s still worth considering. You might have other dependents, want to cover your final expenses or ensure your spouse can maintain their lifestyle.
“Am I old enough to need life insurance?”
You might think you’re too young and healthy for life insurance, but that’s the best time to get coverage. You’ll qualify for lower rates that can stay locked in for years.
“Do I need life insurance if I’m not the primary breadwinner?”
Stay-at-home parents provide valuable services. Replacing childcare, housekeeping and other contributions could be expensive.
5 reasons why you should consider life insurance
Life insurance isn't one-size-fits-all. Whether you’re exploring coverage for the first time or reviewing an existing policy, it’s important to reassess your needs as life changes. Here are 5 common situations where asking “Do I need life insurance?” or “Do I need more life insurance?” can help you make the right choice for your financial future.
1. You’re growing a family
Marriage brings exciting changes—and new financial circumstances. Once you’re building a life together, your spouse may rely on your income or share your debts, so it’s essential to plan ahead.
Having children also shifts your priorities. From childcare and healthcare to education and everyday expenses, the financial responsibilities start early and can last for decades. Preparing now can help your family stay on track financially no matter what life brings.
Stay-at-home parents play a vital role in the household—managing childcare, daily routines, transportation and more. Replacing those responsibilities would come at a significant cost, so having a safeguard in place can help ensure your family continues to thrive.
2. You’re buying a home
Buying a home is one of the biggest financial commitments you can make. A mortgage often lasts 15 to 30 years, and that debt doesn’t disappear when you pass away.
Your family would have to make those payments to keep the house. Without a life insurance policy, they might struggle to afford the monthly costs on reduced household income. In the worst case, they could face foreclosure and lose the home entirely.
A life insurance policy can help protect your loved ones from the risk of financial hardship—or even losing the home—especially if you’re the primary earner or if multiple incomes are needed to afford the payment. This could mean paying off the mortgage entirely or continuing monthly payments with additional financial support.
3. You’re taking on significant debt
Other debts can also linger after you’re gone. Car loans, credit cards and personal loans may still need to be paid. And while federal student loans are typically forgiven when the borrower dies, private student loans often aren’t. Even if your loved ones aren’t legally required to pay these debts, they may choose to out of personal obligation or to avoid financial complications.
The situation gets more complicated if you have co-signers. When you co-sign for someone else’s loan—or they co-sign for yours—both parties are equally responsible for the debt. If something happens to you, your co-signer becomes fully responsible for the remaining balance.
Having financial protection in place ensures your family—and co-signers—aren’t left to manage the debt alone.
4. You’re starting or running a business
If you own a business, life insurance can play a key role in keeping things running smoothly. Key person life insurance can help protect your business by covering lost income, business debts and the cost of finding and training someone to step into your role. This type of coverage is especially valuable if you’re the person who brings in clients or manages essential operations.
If you’re a business owner with partners, a life insurance policy can fund a buy-sell agreement that allows your partners to purchase your share of the business from your family at a fair price. This can help avoid difficult decisions about ownership and day-to-day operations.
And life insurance can serve as collateral for business loans while you’re alive, helping you secure the funding you need to grow. Some lenders even require key person coverage before approving business loans.
5. You’re planning for retirement
Your financial priorities evolve with age. Retirement can introduce new reasons to consider coverage, especially if you're married and your spouse relies on your pension, Social Security or retirement savings.
These income sources may be reduced or end entirely when you pass away, which can impact your spouse’s ability to maintain their lifestyle—particularly if there’s a significant age gap and they have many years ahead without your financial support.
End-of-life costs—including funeral, medical and legal expenses—can add up quickly. Having financial protection in place can help ensure these expenses don’t overwhelm your loved ones.
You can also use life insurance to leave cash for your heirs, which can be beneficial if your assets aren’t easily accessible or transferable.
3 more important scenarios to consider
Everyone’s financial picture is different, and life insurance needs can go beyond the most common scenarios. Other situations where life insurance can offer meaningful protection include:
- Caring for aging parents. You provide financial support and want to ensure their well-being continues.
- Blended families. You have stepchildren or children from previous relationships you want to protect financially.
- High earners. Your estate may be subject to taxes, and coverage can help ease that burden for your heirs.
Having life insurance is generally a good idea if you have financial obligations or people who depend on you, but everyone’s needs are different. It’s a good idea to consult a financial professional for personalized guidance.
What affects life insurance costs?
As you explore your life insurance needs and options, it’s helpful to understand the factors that can influence the cost. Here are 4 key factors many life insurance companies look at when determining your policy’s price:
Age
Younger people generally pay less, so it’s smart to get coverage sooner rather than later.
Health
Most policies require a medical exam or health questionnaire, and healthier people tend to get better rates.
Lifestyle
Smoking, dangerous hobbies or high-risk jobs can increase your rates.
Gender
Women typically pay slightly less than men due to longer life expectancy.
Different types of life insurance policies also have different rates. For example, a term life insurance covers you for a specific period and costs less because it’s only for that term. Meanwhile, whole life insurance (also called permanent life insurance) is more expensive because it includes a cash value component and covers you for your entire life as long as you pay premiums.
How much life insurance do I need?
The amount of life insurance you need depends on your specific financial situation. A common starting point is to multiply your annual income by 10, but this rule of thumb doesn’t work for everyone.
Think about what your family would actually need if you weren’t around.
- Consider ongoing expenses like mortgage payments, childcare and daily living costs.
- Factor in one-time expenses like funeral costs, paying off debts and college funds for your children.
Your coverage amount should reflect your family’s actual financial needs. If you have high debt or a lifestyle with significant expenses, you may need more coverage. On the other hand, if you’ve built up savings or have other insurance benefits, you might need less.
Who doesn’t need a life insurance policy?
Life insurance isn’t necessary for everyone, and your need for coverage can change over time. Changing circumstances might mean you no longer need as much coverage, or any at all.
If you fall into one of these 3 categories, re-evaluate whether you need life insurance. You may be able to reduce or skip coverage with little financial risk.
Single, with no dependents or debt
You probably don’t need a life insurance policy if you’re single with no dependents and no significant debt. If you have enough money saved to cover your final expenses and you’re not supporting anyone financially, you may not need life insurance.
High net-worth individuals
Wealthy people who are essentially self-insured might not need traditional life insurance either. If you have assets and investments that can support your family’s needs, life insurance coverage might be unnecessary.
Debt-free retirees
If your spouse has enough retirement income and savings to maintain their lifestyle and you don’t have debts or dependents to worry about, you might not need to keep paying premiums.
Even if you think you don’t need coverage, it’s worth talking to a financial advisor to ensure you’re not missing something important.
Making the right choice for your legacy
Life insurance decisions are important—and we’re here to help you feel confident every step of the way. Navy Federal Financial Group offers life insurance services to help you protect your family’s financial future. Our financial advisors can help you understand your options and find the right life insurance policy for you.
We also have resources designed for military families, including information about how military life insurance benefits work with other coverage.
Ready to learn more? Contact one of our financial advisors for personalized guidance.
Disclosures
This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.