Yes You Need A Life

I'm in my 20s and I've heard that I need life insurance. I don't have kids, though, or a large amount of student loans ... do I still need it?

There is quite a bit of conflicting information in regards to life insurance.

Financial Obligation
I'd like to start with why you'd need life insurance. If you were to pass away, is there someone who depends on your financially that would be unable to support themselves (ie children, a spouse, or a parent that you support)?. Or if you are totally disabled and you need this money for health care, & home care.

Protection
There are many different types of life insurance. As a rule of thumb - life insurance should be purchased for financial protection planning. Therefore - a term insurance or whole life would be a good starter that would fit into your needs & budget.

Retirement
I would strongly discourage endowment or unit-linked policy. The reason is because I believe insurance should be used for protection planning and you should invest for retirement through EPF, Private Retirement Scheme or Mutual Funds.

I don't recommend that you try to do both by having a fancy insurance policy. In my opinion, it's very expensive to blend the two and there are high agent's commissions etc associated with these policies.

Term Insurance Versus Whole Life Insurance
If you determine that you need life insurance, you can take out a 20 or 30-year term life insurance policy and get much more coverage than you can for the monthly premiums on a whole life insurance policy with a far lower death benefit. It's better to get hundreds of thousands of dollars in additional coverage with term life insurance than to have an insurance policy that is slowly building up cash value. Also, did you know that oftentimes your insurance agent's commission on whole life insurance is equal to 100% of the first year of your premiums?

Group Insurance
Many companies offer group term life insurance equal to 1-2 times your salary as part of their company benefits package. If your company does, make sure you name a beneficiary for this policy. A beneficiary is the person who inherits the money if you die. This is generally enough money to pay for funeral costs and cover some other expenses like paying off your debts.

Group insurance is a temporary insurance & acts like a catch 22 plan. Once you leave employment - you are no longer insured under the employer's group insurance. If you are asked to leave because of illness - then you are unlikely to be accepted for new life insurance or premium loaded or benefits limited. For example - you are asked to leave employment due to cancer - your group insurance policy will cease to cover you - and you can forget about applying for new life insurance plan.