Every person who takes on the responsibility of parenting enters into an adventure that is fraught with difficulties but ultimately rich with rewards. And navigating this path as a single parent can make the journey even more difficult at times. When it comes to matters pertaining to finances, this adage rings especially true.
Single parents frequently have particular questions when it comes to ethos life insurance . Let’s take a look at some of the most often asked questions that advisors get from parents who are raising their children alone.
1. As a single parent, why is it important for you to have life insurance?
Life insurance is something that should be strongly considered as part of any household’s financial plan, but it is especially important for households who only have one parent.
Even though it may appear to be stating the obvious, it is vitally crucial for single parents to recognise the lack of a second parent. If the single parent passes away, unlike in a family with two parents, there may not be a clear choice for the next person who will assist in paying the expenses or caring for the children. Life insurance can be used to provide a financial safety net that otherwise might not be present, which might make it easier to answer certain difficult questions.
In spite of the fact that life insurance is extremely important, households with only one parent are significantly less likely to have it. One survey indicated that 69 percent of single parents with children who were still living at home did not have any form of life insurance. You can compare this to the 45% of households with two parents that do not currently carry any form of active life insurance. If you are a single parent, now is the time to develop a plan to ensure that your family will always be protected in the event of an emergency.
2. What are some of the costs that life insurance can help cover?
Having life insurance can be of assistance to you in paying the ongoing costs that will be incurred by your dependents and children in the event of your passing. These expenditures may include monthly payments for a home (whether they are rent or a mortgage), outstanding debt, present and future educational requirements, costs associated with end-of-life care, costs associated with raising children (including food, clothing, and housing), and so on.
You can leave a tax-free sum of money to your loved ones in the form of life insurance proceeds, which can assist them in continuing to live their lives after you’re gone. If you want to learn more, you can find additional information on what kinds of things life insurance can cover in this article.
3. If you are a single parent, what much of life insurance do you need to have?
When figuring out how much life insurance you need as a single parent, the first thing you should do is think about your lifestyle, your obligations, and your children’s care and education in the future. Include, in addition to the things that we went over in the answer to the last question about what life insurance can cover, any specific or individual financial demands that your family has.
Next, we recommend that you use a life insurance calculator such to this one to assist you in further determining your requirements. You can get a general sense of the amount of money that would be required to take care of your loved ones in the event that you were no longer around by responding to a few crucial questions.
Last but not least, you should consult with a life insurance representative so they can assist you in locating the policy and cost that is most suitable to your requirements.
4. If you are a single parent, selecting a beneficiary for your life insurance can be challenging.
Planning for unexpected events and one’s own death is an absolute must for all single parents. It is essential that your loved ones are aware of the plans you have made for the welfare of anyone who is dependent on you in the event that you pass away. Therefore, you will need to include discussions about life insurance in your end-of-life plan, despite the fact that these discussions are not particularly pleasant.
In most cases, a parent will appoint their spouse or the other parent of their child or children as the beneficiary of a financial plan (person who gets the death benefit cash payout). If, on the other hand, there is no other parent in the picture, you will be the only one caring for your children after your passing, thus you will need to select right away who will take care of them.
The second question is, will you also put your faith in this individual to take care of the funds necessary for your dependents? It is not required that they be the same person. The primary caretaker and the person entrusted with the administration of your dependents’ estate do not necessarily need to be the same person. You may choose to entrust the administration of your dependents’ estate to a trusted friend or professional. You will need to give some thought to how you want your children to be provided for financially in the event that you are no longer around. We recommend having a conversation about your plan with your loved ones as well as any reputable estate or financial advisers you may know.
Do not, under any circumstances, designate your child as the beneficiary of your life insurance policy since federal law forbids anybody under the age of majority to receive a payout from life insurance (which could be 18 or 21 depending on your state). Please visit this link for further information on how to name beneficiaries.
5. What kind of life insurance is recommended for a parent who is raising a child alone?
There are a lot of different kinds of life insurance policies available these days, but we’ll go over some of the more common ones so that you can get started finding the one that’s right for you as a single parent.
Life Insurance on a Term Basis
Term insurance is an excellent choice to make if you don’t have a lot of money or if you have trouble coming up with enough money to pay your bills on time. This is commonly the case for single parents. Should you pass away within the policy’s term, your beneficiaries will get a cash benefit from your term insurance. You make a payment called a premium each month to keep the policy in effect in exchange for the death benefit. When it comes to a term policy, if you stop paying the premium, the policy will expire and you will no longer be eligible for the benefit. This is a short-term form of coverage that will last for as long as you have a need for it or the financial ability to pay for it.
In most cases, a premium payment on a term policy that is within a budget that a single parent can afford can be found. It is important to keep in mind that in order to be issued an insurance policy and have your premium set, you must first successfully complete the underwriting process.
Permanent Life Insurance
Then there are the products known as permanent life insurance for children . These policies typically come with a higher monthly premium cost for the same amount of death benefit as a term insurance of the same size would provide. On the other hand, a perpetual insurance policy will, in addition to the death benefit, build up monetary value over time.
After a predetermined amount of time has passed, the cash value included within the insurance may be withdrawn or used as collateral for a loan. When you borrow money from a permanent insurance policy, you are essentially using the cash value of the policy as collateral, and the interest rates on such loans are typically quite reasonable.
If the concept of a policy that is in effect for a longer period of time appeals to you but you are concerned about whether or not you will have the funds available to pay the payments each month, then a universal life insurance policy may be more your speed.
When you are a single parent with only one income, flexibility is essential. You have the ability to make more variable payment amounts on the policy if you have a universal life insurance policy. If you are thinking about purchasing a universal policy, it is in your best interest to consult with an insurance agent so that you can ensure that the policy you purchase is tailored to your specific requirements and circumstances.
Conclusions
It’s not easy being a single parent, but knowing that your kids have a safety net like life insurance can help ease some of the stress that comes along with it. If you haven’t done so already, get in touch with a reliable insurance professional who can guide you through the first steps of securing your peace of mind.
