Learn and Plan | 5 things single parents should consider about life insurance
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5 things single parents should consider about life insurance

Mar 26, 2024, 6:09:00 PM | Reading Time: 4 minutes

If you’re a single parent, life insurance can secure financial protection for your kids should the unexpected happen. But navigating the ins and outs of life insurance can bring up a lot of questions. Here, we’ll answer some of those common queries single parents ask when it comes to securing life insurance.

The vital role of life insurance for single parents

In 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 day-to-day 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. Single parents say they’re more likely to depend first on savings (59%) and family (57%) if they were to die than on life insurance (47%).1 If you're a single parent, it’s a good idea 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 can be a vital step you take as a single parent to safeguard your children's future. It's about peace of mind, knowing they'll be taken care of financially 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 Midland National representative. They can guide you through the process, help you find the right coverage to meet your family's needs and give you one less thing to worry about on your parenting journey.

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.

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

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