Most parents automatically understand the need to have life insurance. At a minimum, you need
to provide some sort of cash to enable your family to continue financially after your death. And that’s true whether you are an income earning parent, or one who shoulders most of the domestic responsibilities. But if you are a single-parent, it requires special considerations when it comes to getting life insurance.
It is typical for divorce decrees to contain language that requires both parents to maintain life insurance for the benefit of the other parent. That will provide the surviving parent with extra cash needed to care for the children as a single parent. However, the coverage required in divorce decrees is often minimal, and completely inadequate to address the special concerns of a single-parent household.
Life Insurance on the Custodial Parent
As the custodial parent, it is very likely that you have two responsibilities in connection with your children – producing income, and providing their direct care. Both are highly insurable events, meaning that there is a need for life insurance to cover both activities.
As the custodial parent, you will almost certainly need a much higher level of life insurance coverage than what either parent would need in a two-parent household. There is of course the need to provide funds to pay for the care of your children, by either the noncustodial parent or another party who has been designated to be your children’s custodian in your absence.
But there will also be need for additional insurance to help pay for the domestic responsibilities that you have maintained in the care of your children. This will need to be sufficient to cover at least the period of time expected in your children’s lives until they reach the age where they no longer need direct care.
Life Insurance on the Non-Custodial Parent
In most instances, the non-custodial parent is primarily responsible for providing monthly child support and/or alimony to the custodial parent. As a noncustodial parent, life insurance is needed mostly to cover the loss of your monthly support payments until the children reach the age of majority.
Because the contribution of the noncustodial parent is largely financial it’s easy to calculate how much life insurance will be needed. You can start by multiplying the monthly support payments by the number of months until your youngest child reaches the age of majority.
But above and beyond providing for monthly support, you should also calculate an additional amount of coverage to help pay for your children’s college educations, as well as any other major expenses that will be necessary during the early lives.
Single Parent with a Deceased Spouse
Unfortunately, since a single parents with a deceased spouse represents virtually the only parents to the child or children of the marriage, the life insurance needs of this parent will be even greater than it will be for a parent in just about any other situation.
If your spouse is deceased, there is no other parent for your children to go with in the event of your death. In this situation, the life insurance policy amount that you choose will need to be sufficient to cover both your financial contribution to your children’s support, as well as an allowance for your domestic responsibilities.
Your children will be going to a non-parent in the event of your death, so you will have to provide the non-parents with the financial means to successfully raise your children to the age of majority, and even beyond.
This will require a significant amount of life insurance coverage, and that can become prohibitively expensive.
How do you work around the high cost of carrying the large amount of life insurance that will cover all of your needs as a single parent with a deceased spouse?
Term Life Insurance to the Rescue
Life insurance needs for single parents is generally greater than what it is for married parents. The situation is also complicated by the fact that divorce often imposes significant financial restraints on both parents.
For most single parents, the best chance they will have in getting the amount of life insurance coverage that they need at an affordable premium, will be to use term life insurance.
Term life insurance simply costs far less than whole life insurance, and other life insurance products that include an investment provision. If you need at least $500,000 in life insurance, you’ll probably find whole life insurance to be unaffordable. But you can purchase a term life insurance policy with the same benefit for a fraction of the premium.
If you are a single parent – whatever the circumstances – you have special life insurance needs. We have been in the life insurance business for many years, and can help you find a policy that will meet your needs, at a premium that you can afford. Give us a call, and let’s talk about your situation.
