Life Insurance and the Single Father
Being a parent is tough, it becomes tougher when you need to shoulder the responsibilities of parenthood single-handedly. Managing your child alone can be a joy as well as a challenge. But, no matter how strong a single parent you are, just like any other parent, for you also the well-being of your child is of utmost importance. And just like any other parent, imagining your children without you being present can be shattering.
Though having an insurance cover is essential for every family, life insurance for single fathers is an absolute necessity. Whether you are a widower or a divorcee, when you have kids the permanent absence of parents from your child’s life can leave them traumatized. Under these circumstances, a life insurance policy can act as a saviour. It needs to be the core of all your future plans.
How Much Insurance is Adequate for a Single Parent?
When planning to invest in a life insurance policy plan as a single father, the first question that comes to mind, after you understand what is life insurance is, ‘how much is enough’. There are certain factors that can help you decide this, lets take a look:
- Your Income: Most financial experts believe that the death benefit that is received by the nominee must be at least 10 to 15 times your yearly income. This would be helpful in dealing with everyday expenses.
- Your Debts and Liabilities: You must think about the financial obligations that you presently have and how would they be paid off once you are no more. When calculating the sum assured you leave behind make sure you include the major expenses such as home loans, car payments, etc.
The insurance cover should also be calculated on the basis of the liabilities that you have on your shoulders. The loans that you have must also be cleared else there is a possibility that your property is seized in order to pay off the loans.
- Your Plans for your Child: The cost of caring for your child is the most important factor that you’ll have to cater for in your absence. Their living expenses such as home, food, clothing, medical and entertainment costs need to be catered for.
If your child is attending some expensive school, coaching/ tuitions, or is keen on some specialized training, you may want to ensure that your death doesn’t put an end to his/her aspirations. In such circumstances, you may want to increase the death benefit some more.
- Your Child’s Condition: If your child has some special physical or mental needs you may want to add a little more to your corpus. Also, in case your child suffers from a disease, you should cater to the medical expenses he/ she may require later in life. Life Insurance companies these days offer many customized life insurance plans that you can opt for.
- The Appointed Guardian: You need to choose someone who would be the best in the worst possible condition. In case the guardian has also been dependent on you financially, for example, your parents you may have to think about a bigger sum assured.
What kind of Life Insurance does a Single Father need?
Term Insurance plans are generally considered to be the best of all types of life insurance for single parents. Affordable and easy to understand, these plans offer an unlimited sum assured option. You have the freedom to choose a policy tenure that you deem right. Whole life insurance policy plans are also regarded as appropriate by many, however, they may be a little expensive as compared to term plans.
It is recommended that you go through the different types of policies that are available to you so that you can make a well-informed decision that proves to be the best for your children in the long run. In case you feel you are unable to decide which plan to opt for, you can always seek help from a financial planner or an insurance advisor to seek guidance about the best insurance options for single fathers.
Who should I name the beneficiary of my life insurance policy?
As a single father or mother, you may feel that naming your child as the nominee of the life insurance policy is the best thing to do, but it may not be so. Insurance companies do not pay the claim to a minor. If you are keen to make your child your beneficiary you would have to appoint a guardian who is over 18 years of age. Till your child turns 18 years (or 21 years in some cases), the guardian will handle all the proceeds. In case you have not appointed a guardian, after your death, the court will appoint one.
The nominee and the future guardian that is appointed must be someone whom you can trust completely. The child’s guardian will be the one who will manage the policy money till your child comes of age. It is also suggested that you clearly state in your will how you would want the proceeds to be utilised at different stages in your child’s life such as higher education, marriage etc.
When you are a parent, you want nothing but the best for your children. Giving them the best education and a comfortable lifestyle is a priority. However, in case of your untimely death, your children may be left orphaned and unsupported. It is only through proper planning that you can ensure that even after such a loss in their life, your children are looked after and well-provided for.
The challenges of bringing up children can multiply when you are a single parent. While juggling between the roles of a father and a mother, you may often feel yourself overpowered by the worry of your child’s future. While averting an unfortunate incident might not be possible, but you can always be prepared so that your child is not at others’ mercy after you pass away. Though you may often feel overwhelmed thinking about it, with life insurance plans you can certainly give them the support and security they would need in your absence.