As a single parent, it’s crucial to keep your children safe in any situation.
Buying life insurance is one of the essential parts of keeping your children safe. As a single parent, you may not be able to rely on another person’s financial stability to take care of your children if anything unfortunate happens to you. Although it is tough to think about and is something most people try to avoid thinking about, we all need to plan for the unexpected. Take a look at these four tips for shopping around for life insurance policies to ensure you purchase the most suitable and affordable plan for your needs.
4 Tips for Single Parents Looking to Buy Life Insurance
1. Buy Term Life Insurance
There are two main sectors of life insurance — term and whole. Term life insurance lasts only for a certain amount of time, usually around 5-30 years. After your term expires, you do not have any life insurance, and you can then buy a new life insurance policy. Whole life insurance is different because you have the plan for your entire life once you purchase it. It also comes with a cash value that builds up over time.
There are specific scenarios where whole life insurance is the better option, but term life insurance is usually the way to go. Term policies are much cheaper and less complex to understand. Along with this, it fits most family’s needs and covers your loved ones in case of an emergency.
2. Decide on a Beneficiary
The beneficiary is the person who is responsible for the payout from your life insurance policy if something happens to you. In some cases, a single parent wants to name a future caregiver as the beneficiary, and others want to name their child the beneficiary. There are pros and cons to each, and this is a huge decision, so it’s crucial to think about it thoroughly.
If you are thinking about naming a future caregiver as the beneficiary, keep in mind that they are in no way legally obligated to use that money towards your child. The person could easily take the money and use it for something you did not intend. On the other hand, if you are thinking about naming your child as the beneficiary, it can be complicated. There are a few laws that prohibit minors from receiving payouts exceeding a certain amount of money. A great way to protect your child and loved ones is to set up a trust. Once you set up the trust, you get to decide how the money will be used.
3. Determine the Total Amount Needed
There is no set amount of life insurance — it varies between each person and family. You must consider what money you provide to your family and how much coverage you would like to leave them with if you were to pass away. In most cases, the recommended amount is seven times your annual salary. The number may sound jarring, but you should speak to a life insurance agent to ensure that you are getting the most affordable plan for yourself. Life insurance agents are trained to know the ins and outs of the industry, meaning that they may know of plans that are cheaper for you and your family.
4. Time the Expiration of Your Policy
With term life insurance policies, different plans have various expiration dates. You usually get to choose how long you want the life insurance policy to last. As a single parent, you want to make sure that your children are covered until they are out of college. Set your expiration date to be after your youngest child graduates from college. At that point, you’ll hopefully have fewer dependents relying on your policy and its payout.
Although you may have friends and family helping you out with raising your child, you probably still feel like it’s all up to you. From paying the bills to making sure there is food to feed them, there is so much that a single parent has to do to take care of their child. Fabric is an online resource for you to quote various life insurance policies, write wills, and so much more — making it extremely easy on you. So tackle your parental must-dos and make sure your family is safe and sound.