Life insurance is an important piece of every family’s financial protection plan, but it is especially important for single parents.
With the strict gendered roles, single parenting has for long been frowned upon and disapproved. Yet, instances of single parenting are now getting common in India. The main reason giving fuel to cause single-parent family is because of the permanent absence of a parent from home due to death, divorce or unwed mother. However, these circumstances not only leave your family traumatized but also deprive your child of love by both the parents.
Raising a child in today’s society has proven to be the most difficult task. Even with the best of circumstances, parenting is challenging and with one parent, the challenges are multiplied. As a single parent, you fulfil the duties of both mom and dad where you have to juggle between responsibilities, making life a lot tougher. However, for a lot of single parents, the most difficult part is the financial responsibilities. With the rising cost of healthcare, education and food, the cost of raising a child is inflated than ever before in India. Studies suggest that the average cost required to raise a child is approximately Rs 40-50 lakh that includes education, marriage and lifestyle.
As a parent you envision of providing best lifestyle and education to your children and leave no chance in providing the same. But ever wondered what would happen in case of your sudden death? What would happen to your children and other family members? Who would become the guardian of your children to look after their needs and requirements? Though this may be an unpleasant thing to consider, but you know what’s best for your child and in order to give your child the best possible life, you need to be well prepared.
Life insurance is an important piece of every family’s financial protection plan, but it’s especially important for single parents who can’t rely on someone else to cover their child’s current standard of living and future expenses.
3 Critical Reasons Single Parent Need Life Insurance
# Debt & Financial obligations
Do you have any debt? This is something every parent must think about how much debt and financial obligations they will be leaving behind when they are no more. Major expenses include mortgage payments, car payments, home loan etc. However, if you are in debt, it is always recommended to take life insurance coverage on a higher side which is enough to cover your debts, so that your family doesn’t end up dealing with a burden of debt while also grieving your loss.
# Cost of raising a child
The most important factor that single parents needs to consider is the cost of caring for their children when they are not around. The needs include day-care for young children, food, transportation, clothing, medical, entertainment etc.
However, these may be the very basic to think about but it’s important to think in a big picture way about these types of costs as this would be necessary for the person who would raise your child in your absence.
The amount of term insurance you need highly depends on your child’s needs and age. If your child is young, the coverage amount required will be high.
# Child’s education costs
Parents are very serious when it comes to education and career of their children. In fact, most of the parents take education as their first priority. Any parent would never compromise on their child’s education. We all know the cost of education in India is very high and it is soaring. According to the report by a college board, the average fees of a good college can cost you anywhere between Rs 20 and Rs 40 lakh.
These costs can add up quickly, especially if you have one more child. Even if you are regularly contributing to college funds, but what happens if you pass away? By buying adequate life insurance, it is a great way to make sure your children receive a quality education and won’t graduate with tons of student loan debt.
Consider your policy beneficiary carefully
Be careful while naming the beneficiary. A single parent is always inclined to name their child as the beneficiary, but there’s a big reason not to. Life insurance companies won’t pay the claim directly to the minors. Even if you want to name your children as beneficiaries, you’ll also have to name an adult guardian for their benefit. If you do not create a trust or make any legal arrangements to manage the money, the court will appoint a guardian, a costly process, to handle the proceeds until the child reaches 18 or 21, depending on different states.
Below are premiums of Term Insurance of both the parents offered by 6 prominent insurers for a 35-year-old male and 35-year-old female non-smoker residing in a metro city. The total sum assured is Rs 1 crore.
(By Santosh Agarwal, Chief Business Officer-Life Insurance, Policybazaar.com)