As a single parent, all of the financial responsibility that you have for your child falls upon you. Single parenting is not an easy job by any means. Single moms have to fill both roles of mom and dad in addition to being bread winner and housekeeper and part time educator. They manage a very busy day in addition to ensuring that bills are paid, food is kept on the table, and children are kept in a home that is as happy and safe as they can manage. Worries about the future and the kind of financial security you can provide can be stressful and anxiety inducing. Will my child have enough money for college? Who is going to pay the funeral costs should I get into an accident? Fortunately, life insurance can alleviate some of these concerns.
Fear about addressing one’s financial needs and trying to find time out of a busy schedule are probably two of the biggest hurdles that single mom’s face when considering life insurance. Many people have the perception that life insurance is prohibitively expensive, or that the practice itself is a scam designed to take advantage of people’s fears. According to a 2011 Genworth Financial Lifejacket Study, single parents across all income levels were the least likely to have life insurance, with lower income single parents being the highest group of people not having life insurance. What may surprise many people is that life insurance is quite affordable to the average person, and many insurance firms provide insurance tips for home and life coverage free of charge. Simply put, if someone can afford automotive insurance they can afford yearly life insurance premiums.
What exactly is life insurance? Essentially it is a cash payout in the event of the death of the policy holder. The money is paid to the beneficiary. A single parent can designate any of their children as beneficiaries, so if they have more than one child, all of the children can be designated as beneficiaries. Typically life insurance policies are either for a fixed period, which is called term, or for the duration of one’s lifetime, which is called whole life or universal. Term life policies are usually better because they provide better returns, and insurance agents charge higher fees on whole life policies than they do for term life. The money that is paid out for a life insurance policy can be used in any way that is needed. There are no stipulations. So if the money needs to be used to cover funeral costs, or if the money gets used to start a college fund, pay medical expenses, or consumer debt, the choice belongs to the beneficiary.
Determining how much life insurance to have is probably the hardest thing for a single parent to calculate. Putting a dollar value on one’s life can seem vain and abstract, but it does not have to be. For one major insurance company, they calculate a 10 year term life insurance policy in the following way. $15 is paid monthly, which comes out to $175 annually. This provides your beneficiary with $250,000 of life insurance coverage. Terms can be made at 10, 20, and 30 years, and smaller terms can be renewed automatically. Of course, this is just a rough sketch since insurance companies take into account the age of the policy holder and their health, but even at $175 a year, this is far cheaper than what people pay for health insurance and automobile insurance. For anyone concerned about the financial integrity of the firms they are considering for life insurance, Ambest is a site that offers reviews of different insurance companies.
Taking out a life insurance policy can be a small but powerfully rewarding step toward financial security. Single parents have enough anxiety to consider whenabout money for their children and being able to afford the things that a two parent home makes much easier. Term life insurance policies can even be cashed out after their term is expired, but this is only for term life with return of premium policies which are generally more expensive than regular term life. In either case, it is a good investment for the single mom.
Amy Nielson is an avid blogger who writes often for insurance sites. You can follow her on Twitter @NielsonAmy.
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