Life insurance is an important consideration for many adults, but perhaps none more so than for single parents. Although none of us like to think about our own demise, if you are a mother or father raising a child alone you need to put in place some sort of life insurance policy to safeguard your child should you become seriously ill or injured, or even die.
There are a number of different life insurance policies available on the market, from an array of different insurance providers. All give single parents peace of mind that their child will be financially protected should the worst happen. This could include situations whereby the parent is suddenly unable to work due to ill health, or the parent passes away leaving unpaid debts and funeral costs to be accounted for.
All life insurance policies are different so it is important to seek advice from a trusted life insurance provider to find the policy that best suits your requirements. The internet is a great place to start when looking for a life insurance policy as you can access a number of different insurance providers, and compare different policies and prices.
A basic life insurance policy will pay out in the event of your death; either in the form of a lump sum or a regular income. The most common type of life insurance policy is level term insurance which pays out a fixed amount should you die within the term of the policy. Decreasing term insurance is similar to level term insurance but the payout gradually decreases as the policy matures. Some people prefer a decreasing term policy if they have a repayment mortgage as the amount owed to the mortgage provider also reduces as the years pass.
If you think that your dependents would benefit more from a regular monthly income rather than a lump sum then a family income benefit policy could prove to be the ideal solution. This type of policy pays out an agreed monthly sum from the date of the initial claim to the end of the policy term.
Insurance providers consider a number of different factors when setting the price of the premium. The type of policy and the amount of cover that you require are the two most important things that your insurance provider will take into account. In general, whole-of-life cover is most often the most expensive as the policy runs for the length of your entire lifetime therefore it is guaranteed to pay out.
You may be insured by your employer with a death-in-service policy which pays out a tax-free lump sum should you die whilst employed by the company. The amount of cover offered by this type of policy varies but can be as much as four times your annual salary. Although of valuable benefit to single parents a death-in-service policy is not necessarily an adequate substitute for a life insurance policy where payouts are often set at a much higher level (up to ten times your annual salary). You also need to consider that the terms and conditions of your death-in-service policy may dictate that any monies that are paid out may have to go into a discretionary trust so you will not be able to stipulate the beneficiaries. In addition, a death-in-service policy cannot usually be linked to a mortgage. Of course, you must also remember that if you leave your job for whatever reason your cover will end and your dependents will not be protected if the worst happens.
Your insurance provider will determine how much life insurance cover you require based upon your personal requirements and your current financial commitments. If you do have a death-in-service policy with your current employer this should be taken into account when determining the amount of cover you require. Basically, the greater the level of cover you have in place the higher your premiums will be so it is important to set an amount that you can realistically afford.
When deciding how much you should pay for your life insurance cover your insurance provider will ask you a number of questions about your lifestyle; these will include questions about your age, your general health, whether you smoke or consume alcohol regularly, your weight and your occupation.
Life insurance policies can run for many years so it is important to make sure that your details are kept up to date. Perhaps you started your policy when you had just one child and a small mortgage, but have since made another addition to your family and have a larger property. In this case you would need to increase your monthly premiums to ensure that the cover you have in place meets your current requirements.
Life insurance is a must for anyone who is a sole household earner as your ability to earn impacts hugely on your lifestyle, and your ability to take care of your child or children. You need to consider who would look after your children in the event that you were to die or suffer an incapacitating illness. Be sure to shop around and carefully choose an insurance policy that will allow you to maintain your current standard of living at a price that you can realistically afford.