Reader’s Question:

I have a new car, and I bought car insurance because Cailfornia law requires that. It’s quite disturbing that my car has insurance while I do not have a life insurance. Is that a necessity for me? I am very single, no children at all, no dependents. Is it practical for a bachelor like me to have a life insurance in California?

Dino

San Diego, California

It’s good that you asked, Dino.

California is very strict when it comes to auto insurance on the road. And it makes sense that you prioritize that for now.

The way I see it, life insurance is intended to protect the dependents of the policyholder from financial loss and bankruptcy in the event of the policyholder’s death. Now you mentioned that you do not have a family or dependents. So that brings you to a situation of not necessarily needing a life insurance policy.

However, it will still make sense if you pick a life insurance in California that earns you cash value over time. This does not only protect you from disability but it can also become your long term savings. Most life insurance policies that earn cash value over time can actually give you benefits in the sense that you can loan from the amount of your cash value at low interest rates. Now since you do not have dependents yet, you may opt not to pay interests since even if that affects your death benefits, you have no beneficiaries so to speak.

Expect that you will undergo medical examination for most life insurance companies. This will serve to verify whether or not you are I coverable for life insurance. Insurers will also take a look at your occupation and activities to check you risks of dying too soon. These sets of information gathered by the insurer will be held as benchmark of your premium rates.

I hope you find this helpful for you to come up with a good decision. Cheers!