Single parents face many unique challenges, especially when it comes to financial issues. With only one income in the household, single parents often have to make tough choices about how their money is best used. For many, the expense of life insurance is not within their budget. Fortunately, single parent life insurance can be affordable.
Despite the cost being a major concern, there are many reasons for single parents to learn about the advantages of life insurance. Why do single parents need life insurance? Let’s look at 5 of the most common questions about life insurance for single parents. You may be able to make a better decision based on this information.
Why does a single parent need life insurance?
As a single parent, the feeling of security that comes from having someone to take care of the children, the home, and the bills in the event of your death is no longer an option. A life insurance policy can provide the safety net your children need and the peace of mind you need.
How much life insurance does a single parent need?
To determine how much life insurance a single parent needs, several factors must be taken into consideration. For instance, your lifestyle, financial obligations, potential medical expenses, and the children’s future education needs must be taken into account.
You can choose to have just enough insurance to cover funeral expenses or have some left over to help your children through college and adulthood. The best person to advise you on this matter is a life insurance agent.
For a single parent, what kind of life insurance policy is best?
Choosing the best type of life insurance for single parents isn’t too complex. Whole life insurance and term life insurance are the two main types of policies available.
- Whole life (permanent life) insurance offers lifelong coverage but the premiums are higher than term life premiums. One advantage of a whole-life policy is that it accumulated cash value. You can borrow against the cash value, but it will reduce the overall cash payout.
- Term life insurance is a good option for single parents who are on a tight budget. If you die before the end of the policy term, the insurance pays your beneficiaries. However, the insurance policy will expire on a preselected date.
Who should you name as your beneficiary?
As a parent, your first instinct is to name your child or children as the beneficiary on a life insurance policy. Be aware that if the child is a minor, they can’t legally accept the money. The payout could be held up in legal proceedings for months or longer.
If your beneficiary is under the age of 18 at the time of your passing, a court-appointed adult will be named as custodian of the funds. In this scenario, your children won’t get the money you intended to provide for their needs until the legal process is completed.
Another option is the Uniform Gifts to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA). These are custodial accounts that allow some of your money to be used for your children’s eligible expenses. The downside is that these accounts are considered an asset and could affect your child’s eligibility for financial aid if needed.
The best option, when minor children are involved, is to set up a trust fund and name it as the beneficiary. You can specify how you want the money allocated, and the trustee will handle the distribution of the funds when the time comes.
What will single parent life insurance cover?
The money you pass on in a life insurance policy is a way to ensure that your loved ones can live their lives without financial chaos if you are no longer there to provide for them. It can be used for mortgage or rent payments, debts, childcare, education needs, and end-of-life costs.
Life Insurance for Single Parents Provides Peace of Mind
To answer your question, “do single parents need life insurance”, the answer is yes. Life insurance is an essential resource that will provide financial support for your children or loved ones when you pass away. During your struggles as a single parent, it can be reassuring to know your children will be provided for if you are no longer there.
Contact Sandifer Insurance Agency if You Have More Questions About Single Parent Life Insurance
We hope the above information will help you make an informed decision about life insurance for single parents. If you’d like to know more or are ready to purchase a policy, Sandifer Insurance Agency will be happy to help.
As a local, family-owned business, Sandifer Insurance is proud to have spent over 40 years helping South Carolina residents get the best insurance for their needs at an affordable rate. Reach out to us by phone, email, or online for a free quote today.
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