Term Life for Single Women
In 2007, it was reported that, for the first time in history, the number of single women out numbered married women. This can be attributed to a number of factors including the fact that many women wait until later in life to get married. The divorce rate in the United States continues to rise and, for women who stay married, they tend to outlive their husbands by as much as 7 years.
The average age at which women get married today has increased to 26 with a growing segment of the female population delaying nuptials until well into their late thirties and early forties. For many women, the path to career advancement and independent living is chosen over matrimony in order to optimize the opportunities that present themselves after college. Even after marriage, women are starting their families after waiting for several years.
Women are taking on more responsibility in their careers and their financial lives. As their incomes increase, so do their obligations. More single women are buying homes on their own. Women who have graduated college carry college loans with them. And, more women are taking control of their financial lives by setting up their own retirement and savings accounts.
Single Women with No Children
Interestingly, single women are also the most underinsured when it comes to life insurance. So, why should a single woman buy life insurance? The most basic reason is that buying life insurance is part of taking control of your financial life. A woman, or, any adult, who strives for true independence, needs to consider the financial consequences of what is left behind if they should die unexpectedly. They also, should have the foresight to anticipate future needs.
Three Reasons for Young Single Women to Buy Life Insurance
It Pays debts and final expenses: Single women accumulate debts just as any other adult does. Women have car loans, mortgages, credit card debt and college loans that, if not paid can create a hardship for surviving family members. Final expenses, including medical costs and funeral expenses, can also be a financial burden. Responsible people account for these expenses and provide for insurance to cover them if they die.
It’s affordable: The best time to buy life insurance is when it is cheapest. Women in their twenties and early thirties are offered very attractive premiums rates for being young and in good health. These rates can be locked in for a long period of time.
It’s inevitable: Most single women don’t stay single. After they marry and join incomes, they become a vital part of the financial life of their spouses. They will also have children who will be dependent on the income of the mom as well as her services in providing care. By buying life insurance early on, it is already in place when the increased need for it emerges. Instead of paying much higher premium rates, the family budget will hardly be impacted by the low rates of policy purchased years ago.
In addition to the three reasons single women should own life insurance, single moms have an obvious obligation to provide for the financial security of their children. Even if a single mom receives support from the children’s father, her loss could cause unnecessary financial and lifestyle hardships for the children without the benefit of life insurance. Life insurance on a single mom provides the added assurance that her aspirations for her children can be realized.
The Term Solution for Single Women
For a young single woman, with her whole life ahead of her, a term life policy may be the best solution. It is certainly the least expensive, so it shouldn’t put any real dent in her budget, and it can be purchased on a level basis for as many as 30 years. If purchased at age 25, this would provide her with coverage until she turns 55 at which point she is not likely to have a continuing need for life insurance. This assumes that in the course of these 30 years she had raised her family and her kids are no longer dependent.
As an example, if a 25 year old woman, in good health, were to purchase a $500,000 30 year level term policy, her premium payments would be around $30 a month for the life of the policy. She could shorten that to 25 years, however, the premium difference would be less than $5 per month.
If she waited until age 35, to purchase a 20 year level term, her premium rate would be around $40 a month. This assumes she is still in excellent health which is not a guarantee. If any kind of medical condition were to develop that resulted in a rating of the policy, her costs could increase to over $60 a month.
The only downside to the term solution is that, if the need for insurance were to continue, she would to purchase additional insurance at a much older age which can be very expensive. For this contingency, it is recommended that a guaranteed conversion rider be purchased which allows the insured to convert the term policy to a permanent policy without evidence of insurability. Riders are also available that can guarantee the renewability of a term policy, but, again, it would occur at higher age which means higher insurance costs.
For most people, buying life insurance is an inevitable occurrence. Single women, especially, are likely to take on increasing responsibilities as they experience life’s events. The need for life insurance begins when you realize that your unexpected death will have financial consequences for loved ones and that is usually when you begin to accumulate debts. From there the need only increases.
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