Being the sole caretaker of one or more children is no easy feat: there are bills that need paying, long work hours, social obligations… it never stops. With a never-ending To Do list, it’s easy for certain tasks to get shifted off as To Do Later. All too often, this includes securing a life insurance policy. According to a recent survey conducted by insurance company Pacific Wealth Solutions, 58.8 percent of parents with children under 18 don’t have life insurance.
The Truth About Single Parents and Life Insurance
“I get so overwhelmed by daily life,” Keith Trivedi, a single father of two teens tells Parentology. “There’s so much to take care of, and the next thing I know there’s another cost to consider. I know I need to create a larger safety net for my family, but I keep putting it off.”
Nelson Lee, the managing partner of PacWealth, says Trivedi is not alone. “Oftentimes, people operate under the impression of, ‘It’ll never happen to me,’ so it becomes a misconception that life insurance can wait until tomorrow.”
It’s also an added expense that can seem less pressing compared to other expenses. And most people don’t fully realize the power of a solid life insurance policy as an investment and savings tool.
“The right policy can show payouts of more than ten times the cash value, cementing a family’s financial well-being,” Lee says
Shocking Survey Statistics
Pacific Wealth’s survey brought to light some other eye-opening statistics:
- 70 percent of single parent respondents without life insurance had three or more children.
- More than half of the single parents (51 percent) with children under 18 completed secondary education, yet nearly the same amount didn’t have life insurance.
- Nearly a third (31.4 percent) of single parents expressed poor asset management as a cause of rifts in their families.
“The statistics reveal a dangerous trend,” Lee says. “Those who really need life insurance, and can probably afford it, are putting their families at risk.”
What to Look for in a Life Insurance Policy
One of the most important factors when looking at life insurance policies is choosing one that will cover all of your family’s expenses with the loss of the policyholder’s income.
“Look for a permanent or whole life policy that doesn’t expire after a set term,” Lee recommends. “It should offer both death benefits and cash value that can be used as a savings or investment tool. It’s also important to look for fixed premiums and insurance costs, so its value doesn’t fluctuate with the market.”
What to Avoid in a Life Insurance Policy
Avoid term policies at all costs, Lee says. Term is low cost insurance that covers an individual for a set period of time.
“Term policies often appeal to a younger audience because they’re inexpensive,” Lee says, “but it’s a nearsighted investment in terms of looking ahead into the future. These policies rarely pay out because most people outlive the terms of the policy.”
It’s also important to be aware: not all insurance agents have your best interest at heart. “I highly recommend you do your own research before speaking with a financial advisor and/or purchasing any policy,” Lee says.
He points out that there are hundreds of life insurance carriers in the United States, yet most brokers tend to sell the same three products which don’t necessarily have policyholders’ best interest in mind.
When Should You Buy Life Insurance
According to Lee, there is no such thing as purchasing life insurance too soon, whether you have a family or not.
“The main purpose of life insurance is to allow families to continue their lifestyle without the income of a departed loved one,” Lee says. “Additionally, they can help cover funeral expenses and ease any financial burdens after the loss of a family member.”
Whether a single parent or not, comparing and investing in a life insurance policy is vital. Key is digging in and understand what your family needs most.