Life Insurance Guide for Single Parents
Parenting is a challenging but rewarding commitment for any person. But this task can be even more challenging for single parents. In the US, there are nearly 24 million children who live in a single-parent family. As a single parent, you serve as the sole financial provider and primary caregiver at the same time. That’s why income protection is important for single parents.
To build a secure financial future, single parents can greatly benefit from life insurance. It provides financial protection and security for the dependents. Let’s discuss the benefits of buying life insurance for single parents.
Advantages of Life Insurance Policies
Whether you’re a single mom or dad, life insurance offers a wide range of advantages beyond death benefit payouts. Here are the most common reasons for buying life insurance:
- Income Replacement
- Childcare and Education Costs
- Inheritance for Beneficiaries
- Guardianship Expenses
- Debt Payments
- Home Mortgage Payments
- Peace of Mind
- Financial Security
Common Questions Single Parents Ask About Life Insurance
1. Is life insurance really worth it?
Having life insurance in place is better than nothing at all. Since it serves as a safety net, investing in life insurance is not a waste of money. It ensures your children will be financially supported when the difficult times come. The death benefit can be used for any purpose like funding the children’s education and other financial obligations.
If you are a single parent, it’s better to learn more about your life insurance options as early as possible.
2. How much life insurance does a single parent need?
Calculating how much life insurance you need as a single parent is a lot easier than you think. Just simply multiply your annual income by the number of years your dependents will need financial support. You should also take into account other expenses like any outstanding debt and expected college costs.
Financial experts recommend having a death benefit of at least 10 to 15 times your annual earnings. This ballpark amount would be enough to cover your family’s needs for years down the line.
If you don’t want to manually calculate your coverage, you may use a life insurance calculator to get a personalized quote.
3. How much does life insurance cost?
A 40-year-old person buying a 20-year policy with $500,000 in coverage would pay around $25 per month. This is just the average amount, which means it can go lower or higher. Life insurance rates vary based on the type of policy, coverage amount, overall health, age, and gender of the policyholder. The younger and healthier you are, the lower your premiums will be.
The best way to know about your life insurance premiums is by getting a customized quote. Choose policies with the same level of coverage and compare them side-by-side. By shopping around, you can potentially save thousands of dollars.
4. What type of life insurance should a single parent have?
There are different life insurance options, but the two main types are term and permanent life insurance. For single parents with limited cash flow, term life is a suitable option. It is designed to cover you for a length of time like 10, 20, or 30 years.
Moreover, premiums for term life are typically lower compared to whole life policies. The affordability and flexibility of term life insurance make it ideal for single moms and dads.
On the other hand, whole life insurance offers lifelong coverage and financial security. With whole life, your children will receive a guaranteed death benefit that’s guaranteed as long as premiums are paid on time. Most whole life policies have a cash value component that lets your investment grow on a tax-deferred basis.
5. How to choose the beneficiaries?
A beneficiary is a person or entity to receive the death benefit if the policyholder dies. If you’re a single parent purchasing life insurance, keep in mind that minors cannot be paid the death benefit. Naming a minor as the beneficiary can potentially delay the payout. Due to legal restrictions, it’s better to stick with an adult beneficiary or an irrevocable trust.
Conclusion
When it comes to life insurance, Local Retirement Group is a name you can trust. We are committed to helping you choose your options and achieve your long-term financial goals. Get in touch with our local agents today if you need help with your insurance plan.
