Life Insurance for a Single Parent

Life is difficult enough as a single parent without the stress and worry of making arrangements for your children in the event of your death. Even if you have already made arrangements for others to care for your children if the worst happens to you, it is essential to consider if the people chosen can continue to support your children financially. Many single parents need a life insurance policy that includes funds that can be accessed by the children’s guardian. For that reason life insurance policies can be a little more complicated for lone parents.

Property

In addition to whole life cover which provides money to your loved ones after you pass away, many people often have insurance policies that help to cover any assets that are outstanding or still in the process of being paid for. The family home is the biggest and most important of these. It is important that life insurance cover on the home is administered properly. The life insurance cover will provide a lump sum to pay down the mortgage payments on the property. The policy needs to ensure that the ownership of the property passes to the correct people; most often this is the children. This property can then be used, but most often it will be sold and the money put into a trust fund.

Trust Fund

By far the most popular form of life insurance option for the single parent family is the trust fund policy. This places a set amount of money into a fund which the children can’t access until certain requirements are met. Often this is an age that is specified in the policy. Some policies allow other conditions to be specified. Although this is a good idea, on its own it does not provide an income to cover basic living expenses or funds to help the new guardian of the children.

Guardians

The people that look after you children after you pass will have to take on the added financial responsibility that comes with caring for them. Recent estimates are that caring for a child costs an average of  140 per week. On top of basic living expenses their guardian will have to pay for school fees, clothing, books, toys and holidays. Even if your children’s guardian can afford this extra expense, you should consider if it fair to ask them to do that. In addition, you need to ensure that the guardian is able to continue to provide for your children in the future. Furthermore, you may want to ensure that your children have the same standard of living that they had before your passing. Many life insurance policies will allow single parents to have the guardian “written in” as a beneficiary. This can either be paid as a lump sum or as a monthly income.

Advice

With so many options to consider it can be difficult to decide on the most appropriate policy. It is essential that you take advice. There are a number of price comparison websites that can be used to search for the right policy. You will be asked to provide a few details and answers to some key questions. Once you have identified a suitable policy you will be directed to the company’s website to make a formal application. In addition, you may want to contact an independent financial advisor who can assess your needs and talk you through the process.

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