I submit that that is the wrong question, or at least not the right question. It would be akin to asking “Do I need a 401(k) or do I need rental real estate?” I believe a better question is “Do I want life insurance?” An even better one is “Will life insurance help me to accomplish my goals?”
Now obviously if you have a spouse and children who are dependent on your income and you wish to provide for them in the event of your early demise, then life insurance would certainly help you to accomplish that goal.
But what if you’re a recent graduate just entering the workforce with no dependents and minimal financial obligations? You wouldn’t “need “ it in the traditional sense, but it could certainly be useful, even if you never married or had children. How?
J.C. Penney, Walt Disney, and Ray Kroc all borrowed on their life insurance policies to help finance their dream. Like most people, James Cash Penney was almost wiped out by the market crash of ’29. A loan on his $3 million life insurance policy saved the day.
Walt Disney couldn’t get traditional financing for his dream amusement park, Disneyland. As most amusement parks of that era were rather seedy establishments and not thought of as being family oriented, banks turned down his loan request. He mortgaged everything he had, including his life insurance policies, to fund his dream, which was an immediate success.
When Ray Kroc started butting heads with the McDonald brothers over the future of the franchise, he used his cash value life insurance policies to buy them out.
These were not stupid men. They procured life insurance when they were young and maintained it so that it was available to them when they needed it. It’s improbable that, as savvy as they were, any of them saw how it would ultimately be used when they bought it.
It takes time, though. You can’t buy it one year and borrow on it the next (well, you could, but a) it wouldn’t be much and b) there would in all likelihood be adverse tax ramifications). It takes years of funding to build up decent nest egg.
So the question to ask yourself isn’t “Do I need life insurance?”, but rather something along the lines of “Will accumulating money on a risk free and tax advantaged basis help me at some point in the future?” If so, then you may want to procure life insurance, even though you don’t “need” it.