Single Parent Life Insurance – What is best?
At Only Mortgages, we have many single parent clients looking to set up a safe home with a good local school to raise their children. We know that when it comes to your children, most of us want to make sure that they are happy, healthy and cared for. (Some peace would not go amiss too!)
Being a single parent, this responsibility can fall on you alone and it is not always easy to make the best decisions. When it comes to your child’s future, you want to get it right. Life Insurance can be such a minefield and knowing what is best can often difficult. This blog is going to look at a few details to help.
Does life insurance help protect your family?
Yes, but firstly we want to think about what would happen if you passed away.
- What friends or family do you trust to step in
- Do they have a house suitable for more people
- Do they have money to feed more mouths
- What do you want for your children’s education
These are questions you would rather not have to think about but as a mortgage adviser, we see the need for the policies more than we would like.
As a single parent, your children often rely entirely on you financially, if you were to pass away and your income was no longer there, this could cause significant issues financially.
The right protection put in place and you can have peace of mind that you do not leave any debt to inherit. You can also consider major milestones, like learning to drive, going to Uni, getting married or buying their first home.
There are different types of life insurance available, policies tailored to different needs. Let us have a look at what policies are available and the protection they offer.
Level Life Insurance
Level Life Insurance provides a lump sum benefit when you pass away. The benefit amount can be used to help manage major household debts like the mortgage or car repayments, help with daily living expenses, or cover funeral costs.
With this policy type, you choose your benefit amount the works for your needs and budget. If you are diagnosed with a terminal illness that will cause you to pass away in time, your benefit will be paid out to your family. The policy can be set up to follow inflation to ensure it’s amount remains relevant to cost of living through time.
This type of policy can be right for you if you want to provide for the future or cover any financial responsibilities like a mortgage. If the money is placed in trust to a guardian, it could enable them to buy a bigger home, move to an area for better schooling for your children.
Family Income Benefit
This policy works in a similar way to level but rather than paying out a lump sum, it will provide an annual amount for a period of years. For example, you may choose to provide £20,000 over 10 years as opposed to £200,000. This can be used to maintain a lifestyle or to prevent reckless spending. This policy can be placed into trust for the beneficiary of a child or guardian to be used accordingly.
Decreasing Life Insurance
This policy is set up to repay a debt, usually a mortgage. This ensures that should you pass away; you can repay the mortgage and leave the children the home. This is the most understood policy, but it is not always right. We must think about if the children are of age to live alone. They now have a home; do they have money for bills?
Securing the right life insurance as a single parent can seem overwhelming but at Only Mortgages, we are here to help. Whatever your needs may be, we will help you find the right policy for your circumstances and budget.
If you think this is a subject you need to sort out, get in touch and we can review for you.
We will not charge you for this service