As a single parent, your children depend on you for everything they have â€” including a feeling of safety and security.
So what would happen if you suddenly werenâ€™t here? Would another parent or relative step in to care for them? Would that person have the ability (or financial means) to give them the kind of future you want for them?
According to singlemom.com, nearly four in 10 single parents do not have life insurance. Of those who have coverage, nearly two-thirds do not believe itâ€™s adequate. And they are probably right.
The typical single-parent household owns just $60,000 in coverage â€” hardly enough to pay family expenses for a year, let alone the almost $290,000 it takes to provide basic necessities for a child from birth to age 18.
If youâ€™re among the many single mothers who feel they need more protection, but arenâ€™t sure where to begin, take heart. You do have options. But before you go out and buy an insurance policy, there are a number of factors you should consider, including:
The needs and expenses you are trying to cover, such as funding your childrenâ€™s higher education expenses if youâ€™re not here; paying for funeral expenses and any related medical costs; paying off debt, including your mortgage; providing income for a child with special needs; or, if you donâ€™t die prematurely, supplementing your own retirement income.
How much premium you can afford? It makes no sense to buy a policy that exceeds your monthly budget.
The length of time you will need your coverage. Term policies for example, which are generally the least expensive, provide coverage for a specific number of years only â€” usually one, five, 10, 15 or 20 years. Term policies do not build cash values and, when the term period expires, it can be prohibitively expensive to maintain the coverage.
Permanent (or whole life) policies, on the other hand, provide protection for life, but they are also more expensive. Permanent policies build cash values that can be borrowed against to help fund planned expenses such as college costs, or to supplement other sources of retirement income.
Note that accessing cash values may result in surrender fees and charges, may require additional premium payments to maintain coverage, and will reduce the death benefit and policy values.
Some advisers say you should own an amount of coverage equal to between five and 10 times your annual income. But thatâ€™s not always true, especially for single moms. Your needs â€” and income â€” are likely to change over the years, and life events such as the birth of another child, the purchase of a new home or perhaps a promotion at work could change your circumstances.
For that reason, you might want to consider a policy that gives you the flexibility to increase or decrease both your coverage amount and premium as your needs and cash flow situation changes. Universal life policies provide this kind of flexibility.
When it comes to protecting yourself, your loved ones and your future financial security, there is simply no substitute for life insurance.
For just pennies on the dollar, life insurance provides the foundation on which your dreams, and your dreams for your children, can be built â€” especially if you canâ€™t be here to build them yourself.
Douglas L. Hall is a senior partner in the 1847 Private Client Group in Conshohocken.