Navigating life insurance: top 5 considerations for single parents

Parenting solo is no small feat—it's an adventure full of ups and downs, especially when it comes to financial planning. For single parents, navigating the ins and outs of life insurance can bring up a lot of questions. Let’s dive into some of the most frequent queries single parents have about securing life insurance.

The importance of life insurance for single parents

For households led by a single parent, life insurance is more than just a good idea—it can be a critical part of financial planning. The reality is, in a single-parent family, there's no second income to fall back on. Life insurance can provide a financial safety net for your children, covering everything from daily living expenses to future education costs in case you're no longer there to provide for them.

Despite its importance, a surprising number of single parents haven't secured life insurance. Only half (52%) of single parents say they’ve purchased life insurance to protect their children’s financial future, if someone else had to raise them.1 If you're a single parent, it's crucial to explore how you can ensure your family is protected.

What life insurance can cover

Life insurance is about securing financial stability for your dependents after you're gone. This could mean covering ongoing expenses like rent, mortgage payments, childcare, education, and even your own end-of-life costs. Essentially, it's about ensuring your loved ones can maintain their lifestyle and have a secure future, generally tax-free.

Determining your life insurance needs

Figuring out the right amount of life insurance starts with looking at your current lifestyle, obligations, and what you envision for your children's future. Beyond the basics, consider any unique financial needs your family might have. Tools like life insurance calculators can give you a rough estimate, but consulting with a life insurance agent can provide personalized advice tailored to your specific situation.

Choosing a beneficiary wisely

As a single parent, deciding who will look after your children and manage their finances if you pass away is a significant decision. It's not just about picking someone to take care of them but also choosing who will handle the financial aspect. These roles don't necessarily have to be filled by the same person. It's a tough conversation, but it's essential for ensuring your children's well-being. Remember, directly naming a minor as a beneficiary can complicate matters due to legal restrictions, so it's important to get professional advice on how to best structure your policy. Estate planning is a complex process and should be done in collaboration with other professionals you may work with (e.g. attorneys, accountants, trust officers, etc.).

Finding the right type of life insurance

Life insurance isn't one-size-fits-all, especially for single parents. If budget is a concern, term life insurance provides coverage for a set period and is generally more affordable. On the other hand, permanent life insurance, while more costly, offers lifelong coverage and accumulates cash value that can be borrowed against. Universal life insurance adds flexibility in payments, which can be particularly appealing for single parents looking for a balance between coverage and affordability.

Closing thoughts

Securing life insurance is often a vital step you can take as a single parent to financially safeguard your children's future if something happens to you. If you haven't taken the plunge into life insurance yet, now is the time to start the conversation with a North American representative. They can guide you through the process, helping you find the right coverage to meet your family's needs and give you one less thing to worry about on your parenting journey.

1. Single Parents and the Financial Future, Life Happens, 2023

Life insurance policies have terms under which the policy may be continued in effect or discontinued. Permanent life insurance requires monthly deductions to pay the policy’s charges and expenses, some of which will increase as the insured gets older. These deductions may reduce the cash value of the policy. Current cost of insurance rates and current interest rates are not guaranteed. Therefore, the planned periodic premium may not be sufficient to carry the contract to maturity. For costs and complete details, refer to the policy or call or write Midland National, One Sammons Plaza, Sioux Falls, SD 57193. Telephone 800-923-3223.

Life Happens® is a nonprofit organization dedicated to helping consumers take personal responsibility through ownership of life insurance and related products.