How Much Term Insurance Do Single Parents Need?

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A life cover is a must-have for many people, but it is very important to have one if you are raising children on your own. Being a single parent, there are many responsibilities on your shoulder. To fulfill the needs of your children, to protect and to nurture them is your duty. Moreover, being in the shoes of a parent, the scariest thing that can cross your mind is the question – what will happen to my children if I am not around?

Therefore, it is important to consider all the possible future scenarios and to plan for them in a proper manner. From school to university, saving sufficient funds that your children may need while growing up is a crucial factor. This is why it is necessary for single parents to opt for a term insurance policy. Term insurance makes sure that your children do not face any financial burden in otherwise stressful times. Once you decide on opting for term insurance, the biggest confusion arises – how much cover will be sufficient? Below mentioned are a few key factors that will help you in figuring out the answer to this.

How Much Do You Make?

A term insurance plan can provide your children with a source of income if something unfortunate were to happen. While deciding on which term plan to opt for you should make sure that the policy provides coverage for at least 50% of your annual income.

What Are Your Child’s Needs?

The amount of term insurance cover you require largely depends on the age and needs of your child. If you have a young child, the amount of coverage required will be high and you will want your tenure to be longer. Whereas, if your children are older, you can opt for a policy that has a comparatively low cover. The needs of your children are also important to consider, they can be their schooling costs or expenses involved in medical needs among many other things. So, it is important to consider a plan that provides enough to cover any such costs.

What’s Your Current Debt?

If something unfortunate were to occur, and you have outstanding debts, all your assets will be used in paying off that debt. If you are repaying outstanding loans or any kind of debt, it is good to pay them in full as soon as possible. otherwise, your beneficiaries will be left with the burden of paying them off. Therefore, if you have any existing liabilities, it is feasible to either pay them off at the soonest or to increase your term insurance cover.

How Much Coverage Can You Afford?

The premiums charged on term insurance increase as you increase the amount of coverage. One of the most important things to consider before opting for a term plan is your budget. While a term plan is cost-effective and affordable, your income should still be taken into consideration while buying one. The ideal time to opt for a term insurance policy is when you are young and start earning a stable income, because the premium charges are lower.

Choice of Riders

Riders offered with a term insurance plan can be useful depending on your needs. However, these riders come at extra cost. Therefore, it is important to see how the rider helps in enhancing the scope of coverage offered by your base policy. If you think that the riders do not provide any additional benefits in securing your child’s future, then you should refrain from purchasing them.

The Bottom Line

There are many single parents who still do not hold a life cover policy. If you fall under this bracket, it is essential for you to buy a term insurance plan at the earliest in order to secure the future of your children. You can use the above-mentioned factors in order to determine the right coverage amount for you.

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