In most cases, spouses take out life insurance to support their surviving partner’s lifestyle after they have departed. As such, a lot of single fathers don’t understand the essence of a life insurance policy, as they have no spouse to support. The truth is, even single dads need life insurance, just like other married dads. Single dads also have responsibilities for their kids and even more, their finances are stretched out, especially if the other parent is completely absent.
Why Life Insurance is Important for Single Dads
Insurance needs for single parents don’t change, just like anyone else. And below are the reasons why life insurance is important for single dads.
To Cover the Child’s Expenses
In case of the untimely death of the single parent, there will still need to provide for the child. Expenses like daycare fees, education, food, clothing, shelter, entertainment, and everything in between. Remember that if your child is young at the time of securing the insurance policy, you will need larger insurance as when compared to a relatively older child.
Considering everything, you will have to assess all your child’s future needs with one of the biggest being education. The cost of quality education might eat up most of the insurance benefits, and the more kids you have the more coverage you will need.
To Cater for Future Financial Obligations and Debt
Leaving your financial obligations to other family members, as well as a child to take care of can be a huge burden. So if you have debt or loans eg, unfinished mortgage payments, student loans, and car payments among others, then you should consider taking out a life insurance policy. This way, your life insurance benefits will be used to cover these expenses even in your absence. Take out a policy with large coverage enough for your kids’ needs as well as other obligations you might have.
Final Expenses
InsureChance.com states that on average, most people spend $7,000 to $12,000 on funeral expenses. While this amount covers all funeral expenses from casket costs to burial fees, embalming, transportation, and other preparation costs, most people cannot raise this amount. So, single dads need life insurance to cover their financial expenses and to avoid leaving the burden for their children or their caregiver, if they are minors.
What to Get
When taking a life insurance policy, one of the biggest mistakes most people do is naming their child as the beneficiary. If you die when your kid is young, the court will be forced to appoint a guardian who will be in charge of the benefit. This is because the law does not allow insurance companies to payout policy benefits to minors, so unless they have attained 18 years and in some cases, 21 years, avoid naming them as the policy’s beneficiary.
There are two major types of life insurance to choose from, i.e term life and whole life insurance.
Term Life Insurance
Oftentimes, term life insurance provides coverage for 5 years to 30years, so it is up to the policyholder to choose what works best for them. Unlike permanent life insurance policies, term life has fixed premiums, and the policy pays out the benefit if you die before the term ends. On the downside, the policy benefit does not payout if you outlive it. But, you have two options, either to convert the policy into a permanent one or to purchase another policy.
Whole Life Insurance
Whole life insurance provides lifetime coverage and unlike temporary insurance, it offers cash value. The cash value is a saving component that grows tax-deferred and is made from a certain percentage of the policy premiums paid. After the policy grows you can borrow against the cash value component. On the downside, permanent life insurance is complex when compared to term life, and the premiums are also expensive.
Assess Your Needs
Before making any life insurance decision, it is important to assess both your current and future needs. Do you have enough financial capacity to pay premiums for the coverage you choose and will you be able to consistently pay them? What are your future financial needs? Assess the future needs of your children and other financial obligations and choose a policy that provides coverage that aligns with those needs.