From food and shelter to financial and emotional support, children depend on their parents in many ways. If you’re single and raising kids on your own, some of the financial responsibilities can be overwhelming. This is why having a reliable life insurance plan can provide peace of mind. Here’s what to know about coverage if you’re a single parent.
Why Is Life Insurance Necessary?
It might be jarring for parents to think about what would happen to their children if something happened to them. Who would provide the kids with financial support? Life insurance helps eliminate some of these uncertainties. A policy can be secured with enough funds to help cover daily expenses such as daycare, clothing, and other basic needs.
Single parents may also arrange to have the coverage allocated for college tuition and related costs. With life insurance in place, there won’t be any questions or concerns about who will shoulder the financial care responsibility.
What Types of Policies Are Available?
The two main types of life insurance policies are term and whole. Term coverage is secured for a certain time period ranging from 10 to 30 years. If a single parent dies while the policy is active, children named as beneficiaries will receive fund distributions, commonly known as death benefits. One of the advantages of term life insurance for single parents on a tight budget is that the premiums are relatively affordable. The rates are also fixed for the entire term. As a general suggestion, consider having term coverage until your youngest child graduates from college.
Whole life insurance plans are in place for a lifetime as long as the premiums are paid on time. There is also a cash value feature that allows a single parent to borrow funds while they are still alive. The funds grow tax-deferred, which means the policyholder won’t have to pay taxes on them. Depending on the plan’s terms, a parent can get cash value for the policy’s entire amount. This accessibility may come in handy during financially-strapped times when additional funds are needed to help raise the children.
How Can You Select the Ideal Amount of Coverage?
Knowing how much life insurance to secure is based on several factors. These include your children’s ages, how much debt you have, and other considerations such as wanting to plan for college expenses.
A reliable rule of thumb is to add up all of your outstanding debt, including mortgage payments. Then, multiply your annual take-home income by seven, which would be the number of years for replacement income if something should happen to you. Estimate how much it would cost to send your children to college. Keep in mind state schools might be less expensive than private, out-of-state colleges. After adding these three figures, subtract any savings you have. The difference will provide a rough estimate of how much life insurance to secure.
If you’re a single parent, you want to ensure your kids will be taken care of financially. Stringer Insurance Agency in Dahlonega, GA, can help you choose customized and reliable coverage. As an independent firm, you’ll have access to policy quotes from leading life insurance providers to make an informed choice. You can count on no-pressure and no-obligation guidance from friendly and experienced agents. To get started, call (706) 864-3515 for a free insurance quote. Visit the website for additional life insurance information.
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