Hereafter 'Young Adult' means someone of age 18-35 and shall be abbreviated YA.

These answers unanimously declare (per p 332 of Personal Finance For Canadians For Dummies (4 ed, 2006, but note that a 5 Ed (2010) exists) by Tony Martin, Eric Tyson):

If there are no dependents, there is no need for life insurance.

But is the following a sound counterargument? If not, please rebut it.

  1. Even if the YA has no dependents, if the YA dies suddenly, then the YA's parents could earn some money from a YA's Term Life Insurance (e.g. Term ∈ [10, 35 years]; Benefit Amount ∈ [$100,000, $500,000 CDN])?

  2. Without Term Life Insurance, can the parents or YA really earn Benefit Amount ∈ [$100,000, $500,000 CDN], from investing over 10 to 35 years?

  • Really, the key to understanding any of this is that you have to consider the expectation value of the possible outcomes, computing cost/gain multiplied by probability. If the odds are that, all things considered, you will likely lose more than you gain --, which insurance companies are experts at predicting, since that's how they make money -- then it's a bad bet, unless there are special c considerations which makes some outcomes better or worse for you than simple financial analysis suggests.
    – keshlam
    Mar 26, 2016 at 1:11

1 Answer 1


It is not likely the YA would die in 10 years. Hence the investment the parents make in policy premiums would lose all of its money. Repeat: lose all money.

On average, you'll slightly lose with insurance. It's there for peace of mind and to mitigate a catastrophe. It's not an investment.

Of course, if the YA is likely to die suddenly, that might change things. But concealing medical information would be grounds for denying the policy claim.

  • 1
    Exactly. The insurance company's profit has to come from somewhere, and that somewhere is all the people who don't die prematurely. The only reason for YA to have life insurance is if the parents are dependent on him/her.
    – jamesqf
    Mar 25, 2016 at 5:36
  • Thank you. I ignorantly restricted my question to only 10 years and have now expanded it to anywhere from 10 to 35 years. Does your answer change?
    – user10763
    Mar 25, 2016 at 5:38
  • 2
    My answer remains unchanged despite your edit. Remember, life insurance will on average be a losing investment. The reason to have it is to help dependents in case of the loss of the insured party. Mar 25, 2016 at 5:41
  • 2
    Life in insurance isn't an investment at all. At most it's a hedging strategy; you are planning to lose money in the hope that, if things go exceptionally badly, it will keep you from losing more money. If that money isn't absolutely necessary to meet commitment you have made to dependents, insurance is about as good a bet as buying lottery tickets... meaning pretty darned awful.
    – keshlam
    Mar 25, 2016 at 10:28
  • 1
    @keshlam: Not just life insurance, ALL insurance is a hedging strategy. So for instance carrying C&C insurance (as opposed to the mandated liability) on a car is just a waste of money, if you paid cash for it and can readily afford another. And life insurance, sad to say, is an even worse bet than the lottery, 'cause if you collect, you're too dead to enjoy the money :-)
    – jamesqf
    Mar 25, 2016 at 17:30

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