A life insurance policy is a contract between an insurance company and a policyholder in which the company provides a death benefit for the beneficiary under the contract in exchange for premiums paid by the policyholder during the lifetime of the policyholder.
There are different types of life insurance policies available to a person. They are:
- Term life insurance
- Whole life insurance
- Universal life insurance
- Variable life insurance
- Variable universal life insurance
- Simplified issue life insurance
- Guaranteed issue life insurance
- Final expense life insurance
The type of life insurance chosen by a policyholder will depend on a number of factors. These factors include the number of dependents the policyholder has, the period the policyholder wants the coverage to last, and how much the policyholder wants the beneficiary to get.
Why You Need a Life Insurance Policy
A life insurance policy is a very important part of financial stability irrespective of your socio-economic status. It helps to take care of your dependents when you die. It takes care of them by ensuring that they can support themselves financially should death occur. People do not like to consider death because it is not a concept that is fun to think or talk about. However, we need to get used to considering the worst-case scenario and plan towards it.
Who Needs a Life Insurance Policy
Generally, if no one is dependent on you financially, then you do not need to get a life insurance policy. If however, anyone is dependent on your income for their financial well being, then you should seriously think about enrolling in a life insurance policy. This protects those dependent on you when you die.
Why Single Parents Need a Life Insurance Policy
Being a parent is a job and a stressful job at that. So, there is no denying the fact that being a single parent is even more difficult. It is even more stressful because you are doing the job meant for two people on your own. Being a single parent puts a strain on you not just physically and mentally but also financially because you have to provide for the child alone. As a single parent, because you are already stressed financially, you may not see the need to or have the extra cash to enroll in a life insurance policy. However, it becomes even more important for you as a single parent to plan for your child or children just in case anything happens to you. Where you are the only parent your child has, life insurance plays an important role in securing the future of your child in the event that the unfortunate situation of death occurs.
Below is a list of some reasons why you should consider getting a life insurance policy as a single parent.
1. Level of Debt and Financial Obligation
If you have lots of debt and financial obligations such as mortgage payment, car payment, and loans that will be left behind if you die, then you need a life insurance policy. The life insurance policy has to be enough to cover your debts so that your family and dependents do not end up dealing with the burden of your debt.
2. Cost of Childcare
Raising a child is very expensive. From feeding to transport, to medical expenses to clothes, the general cost is very expensive. It is therefore important for you to make provision for your child so that if and when you die, the guardian who will be in charge of your child will not be burdened with the financial responsibilities of raising your child.
3. The Rising Cost of Educating a Child
It is a known fact that the cost of education is very high and it is constantly rising. What happens when you pass away? Buying an adequate life insurance policy is a good way to ensure that your child gets a quality education without accumulating too much student loan debt.
Naming the Beneficiaries
Naming the beneficiary or beneficiaries in the policy you decide to take is an important decision. As parents and single parents especially, there is the temptation for you to name your child as the beneficiary in the policy. However, insurance companies do not pay death benefits directly to minors. So, if your child is a minor, you will need to name an adult in the policy as custodian to receive and handle the benefit for your children. If you fail to name an adult as custodian, the court will appoint a custodian. The process of appointing a custodian will take time and money that will be charged to the death benefit. The custodian appointed by the court might also be someone that you would not have appointed.
Cost of a Life Insurance Policy
As a single parent, you might consider a life insurance policy to be costly, considering the fact that you are already paying for a lot of things on your own. However, this is a general misconception about life insurance policies. We can agree that some policies such as the whole life insurance policy can be very expensive to enroll in. However, there are a lot of cheap and affordable life insurance policies available. Term life insurance policy is an example of an affordable life insurance policy. The major downside of this type of policy is that it expires after a specific period of time. To get around this, when purchasing this policy, you can compare the prices and duration provided by different companies and so you will be able to enroll in the policy with the longest duration. By the time it expires, your children will be fully grown and might not need the policy anymore. If you still feel the need to keep the policy, you can either renew it at the end of the period specified or upgrade it to another type of life insurance policy.
The amount of insurance you will need to get will depend on things like – whether you have debts and financial obligations and how much if any, how many dependents you have, the duration of time you intend the coverage to last, and how much you intend your beneficiaries to get as death benefits. Insurance providers have a life insurance calculator to help calculate and estimate how much coverage you need based on the above-stated factors.
If you’re exploring health insurance or looking for alternative healthcare plans, Life Insurance, or supplemental insurance plans feel free to reach out to our professional agents and see what program or programs might be right for you, that can help you through this time. Call Vivna, Inc. today to learn more here: 866.793.2301