Life can sometimes throw us curve balls that are challenging to anticipate. Whether it’s a car accident or falling ill, there’s no way to know when tragedy may strike.
Life insurance serves as a protective shield for when these tragedies happen. Discussing these matters can be uncomfortable — no one likes thinking about how their families will be impacted when they pass away. However, we must consider securing the financial future of our loved ones and children especially.
Single mothers do it all. They cook, clean, work multiple jobs sometimes and spend time caring for their children. Children rely on their single parents financially, and that’s why life insurance is a must for single-family households.
There are some misconceptions about life insurance that we’ll address. We’ll also get into the reasons for needing life insurance and how to afford a coverage plan. Let’s get into it.
Who Needs Life Insurance?
Many people believe that life insurance is best for married couples and elderly folks. However, the truth is that anyone who has children who rely on them financially is qualified and should have a decent life insurance plan in place. Based on 2021 findings, 52% of Americans have life insurance to cover them in the event of their death, whether it’s untimely or prematurely.
It’s crucial to have coverage regardless of your marital status. Caring for a child means ensuring they have a financial cushion in the event that you’re no longer around. Here are some other reasons for purchasing life insurance that may apply to you:
- If you’re a single parent who owns a business, adding life insurance coverage can help your child or children disband or sell your business.
- If you owe a debt, co-signers will be responsible for those payments. Setting up life insurance will lessen that financial burden.
- Suppose you want your funeral or burial expenses covered. In that case, there are affordable life insurance options that can help ease the financial impact of your death.
Single moms and dads are responsible for so much. Because of that, the security that comes with life insurance coverage is enough to grant them peace of mind for the future. Let’s take a look at some of the different types of life insurance available to single moms.
Types of Life Insurance
Taking time to shop for life insurance may not be an enjoyable process, but it’s necessary. There’s value in taking care of your family, and as a single parent, it’s one of your top priorities. Life insurance kicks in when you’re gone and makes up for the income that you’re no longer around to provide. Below are some of the types of life insurance broken down into categories.
Term Life Insurance
Term life insurance is a policy that is set up for a specific amount of time. It’s the most basic form of life insurance and pays out in the event of death. Terms can typically be set anywhere between one and thirty years.
Level term and decreasing term are two of the most common term life insurance plans. Level term insurance keeps the death benefit the same while the policy is in effect, and decreasing term life insurance reduces the death benefit over the course of the policy term.
Permanent Life Insurance
Permanent life insurance plans are beneficial because they cover you as you age, all the way up until you pass. There are various types of permanent life insurance, including:
- Traditional whole life
- Universal life
- Variable universal life
Each type comes with its own terms and conditions, so it’s worth your time to research and find which type is best for you and your financial situation. Insurance agents are experts who can assist you in deciding if term or permanent life insurance is most suited to your needs.
Final Expense Insurance
Based on the most recent research in 2019, the average cost of a funeral with viewing and burial included came to $7,640. Many cemeteries require vaults as well, which raises that average price to $9,135. As you can see, planning for these expenses is in your best interest. Final expense insurance allows you peace of mind knowing your funeral is covered on the financial end of things.
Regardless of the type of coverage you have, single parents benefit from having some kind of policy. It’s worth looking into the different types through various insurance providers so you can make better educated decisions according to your needs.
Deciding Your Coverage and Naming a Beneficiary
Keep in mind that your children cannot be the recipient(s) of your death benefit if they’re under the age of 18. It would be best if you considered multiple factors when deciding who your beneficiary is and the adult custodian responsible for handling the policy money when you’re gone. It should be someone you trust enough to manage the finances responsibly.
If you run into challenges when naming a beneficiary, do not fret. Another alternative is to set up a trust in your child’s name, which allows you to spell out the rules for the money saved. You have more control over what happens in the event of your death.
The Importance of Life Insurance
The cost of raising a child varies from family to family. Back in 2015, it was estimated that the cost of raising a child averages out to $233,610 in the United States. It’s no secret that it’s expensive to care for a child, and ensuring that they’re well taken care of in the event of you dying should be paramount. Consider purchasing a life insurance policy to care for the children you love effectively.