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Ask the Life Insurance Expert

I am a single 35-year-old woman with no children. I have a mortgage and a lot of credit card debt. Since I have no heirs or dependents, do I need life insurance? Or should I just use that money now for paying off my debt?

The main purpose of life insurance is to protect dependents in case a family provider dies prematurely. The life insurance money replaces the income the insured person would have provided. Most buyers purchase enough coverage to make sure there will be money to pay the household bills and other essentials, such as the children's college tuition. Some buyers also use life insurance to protect a large estate or business. Heirs can use the proceeds from a policy to pay the estate taxes.

Because you are single with no children, you probably don't need life insurance.

Still, it's a good question to consider, even if there are no immediate needs for coverage. Remember, it's easier to qualify for the best life insurance rates the younger and healthier you are. If you think there's any chance you will need life insurance in the future -- perhaps you want to get married one day or have children -- then you might want to consider buying coverage now while you're still young and before you develop health conditions.

Although you don't have children, does anyone else depend on you, such as an aging parent or a sibling? That would be another reason to purchase coverage now.

There are two basic types of life insurance -- term life, which covers you for a certain number of years; and permanent life insurance, which provides lifelong coverage and has cash value.

Term life insurance is much less expensive than permanent life because it has no cash value. It pays a death benefit to the beneficiary on the policy if you die within the term. A 20-year $250,000 level-premium term life policy costs about $150 annually for a healthy 30-year-old, according to the nonprofit Life and Health Insurance Foundation for Education and LIMRA, a global research and consulting organization that tracks the life insurance industry.

Permanent life insurance, such as whole life or universal life, includes cash value that grows with time. You can borrow against the cash account or make withdrawals, but the death benefit is reduced if you don't repay the money by the time you die.

Most term life policies sold today can be converted to permanent life insurance.

If you decide to buy life insurance, make sure you do business with a reputable insurance company with strong financial ratings. Life insurance is a long-term investment, so you want to buy from a company that will be around for many years to come.

For more, see Life insurance basics.

Last updated: May. 7, 2012