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Should Single Parents Consider Life Insurance?


Being the sole provider for your children can be financially difficult but a Life Insurance coverage can ease your stress and ensure their bright future.

Single-parent households are increasingly common in Canada, they account for 16.3 percent of all families and 10 years ago, the number was already 700,000. 

As a single mom or dad, you are the only person there looking after your children. You will have a lot of responsibility to them, and it is important that you address the financial security to meet all their needs. When it comes to financial planning and ensuring your children are well protected, there can be a lot on your plate and that is twice the stress. 

However, being prepared for the unthinkable can set your mind at ease and this can be achieved by a Life Insurance coverage. In this article, Best Insurance Online will discuss the reasons why you might want to consider Life Insurance, the best type of policy for you, beneficiary considerations, and some other top tips. 

Why should single parents consider Life Insurance? 

As a single parent, you are highly likely to be the sole breadwinner and provider for your family. Your children will also be dependent on your income to pay for their daily needs. Whether you share fiscal responsibility with your ex-partner or not, it is recommended by Canada Protection Plan that you secure Life Insurance coverage separately. 

Once you have decided to purchase an insurance policy, start with considering your children’s current and future expenses if you were to unfortunately pass away. With a Life Insurance coverage lined up, you can ensure that expenses such as funeral, mortgage, and large debts will be taken care of without drastically changing your children’s lifestyle. 

More importantly, when your children are ready for post-secondary education, Life Insurance coverage can also provide funds to help meet this goal, making sure of their bright future even when you are not around anymore.

Single Parents Life Insurance - Best Insurance Online
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Who should you name as the beneficiary? 

Although it seems very natural to name your children as the beneficiary, it is not really advised as minors will not be able to make insurance claims. Therefore, in this case, a will come in handy to seamlessly transfer your assets to your children. In this document, you can outline beneficiaries on your life insurance policy and other investments. Your children will surely receive the payouts: 

  • The funds are stored in a trust and when your children reach adulthood, they can access this trust freely. 
  • You should name the trust as a beneficiary, but have an adult custodian manage the money 
  • Another adult should also be named as the beneficiary to distribute the money to your children. 

To illustrate, you can have your surviving spouse as your children’s guardian. In this case, your children can be the beneficiaries and your spouse will be named as the trustee. This means the money will always belong to your children, but it is controlled by your spouse. Another option is naming another family member as the trustee then the children live with the surviving parent, but any money requests must go through your named trustee. 

Another crucial point is when your children are 18, despite being regarded as adults, most parents would not trust their children with a huge sum of money. Hence, a trust would be a clever idea until the children reach a certain age such as 25 or 30

Be sure to always keep your list of beneficiaries up to date because you outlive one of them, things can get complicated, and your children may receive less money because of taxes and probate fees.

What types of Life Insurance are available for single parents? 

As the financial resources of single parents are already stretched, insurance premiums must be kept to a minimum. Your most inexpensive option would be to get term life insurance as it has the cheapest premiums initially but increases over time in 10 or 20 years for instance. The catch here is “affordable now” in exchange for “more expensive in the future”. 

Another alternative is permanent life insurance (e.g., whole life or term to 100) which can be kept forever. This type of policy is for parents intending to leave an estate or a lump sum of money behind for their children after your passing. Commonly, permanent life insurance has higher costs than term life. 

You can also choose to mix both types together. This provides a layer of lifetime coverage combined with a cheaper layer of term life insurance that has high coverage while your children are still young. Nevertheless, always keep in mind that the high coverage amount is always your priority. So, choose a larger amount of term life insurance in replacement of a smaller amount of permanent life insurance.

Single Parents Life Insurance - Best Insurance Online
Should Single Parents Consider Life Insurance? 4

What other factors should single parents consider when purchasing Life Insurance? 

We have discussed the beneficiaries and touched a bit upon trustees/ custodians. When you are thinking about your will, it is worth considering who can be your children’s guardian besides their natural parent. 

Under some circumstance, the court may find another individual preferable to your surviving spouse: 

  • It has been shown that your children’s lives will suffer should they live with the natural parent. 
  • It would be disruptive to your children’s welfare if they have been spending an extended period and have established strong attachment to someone else, such as their grandparents. 
  • Your children once they are old enough understand their decisions, do not wish to stay with your surviving spouse and are satisfied with their current carers. 

When you plan your will and life insurance policy, think about your children’s situations and the most sensible guardian(s) for them in the future after your passing other than their natural surviving parent. 

The bottom line

Life Insurance is certainly not just for married couples, the truth is if your death would hurt someone financially, you might need to consider Life Insurance. If you are still unsure about which policies to get, how much coverage, and the alternatives, don’t hesitate to contact us at Insurance Direct Canada.

Frequently Asked Questions

How much Life Insurance do I need as a single parent?

As the sole breadwinner of the household, your life insurance payout could take care of your children’s current and future needs. The amount of coverage depends on your children’s age and the goals you have established for them. This includes their future education and even a down payment for their first house. 
Your present savings and budget for an insurance policy would also be two crucial factors determining the premiums and the type of Life Insurance. You should consider any parental support payments, financial assets like RRSPs that can be passed on, etc. 
According to Sun Life, a general rule of thumb is to purchase a policy that’s worth at least 10 times your annual income. For instance, a $500,000 policy is advisable if you earn $50,000 per annum. 
Consult your insurance representative to discuss your unique personal situation. They can explain all the available options and recommend the most suitable one for you.

How can I budget my monthly life insurance premiums as a single parent?

Best Insurance Online is aware that adding another expense to your monthly budget can be a painful experience. However, please be rest assured that there are numerous affordable insurance options to provide the desirable protection for you and your children.
As a single mom or dad, there are some ways for you to manage this: 
– Buy a more affordable policy with a smaller coverage amount and increase your coverage over time if necessary 
– Make a plan and establish both short-term and long-term financial goals.
– Track your expenditures and frequently adjust your spending habits. 
Take these small steps gradually and there will be a noticeable difference with your budgeting.

What are the alternatives of Life Insurance for single parents?

If you are not interested in what Life Insurance coverage offers, then there are still other options worth checking out, namely disability insurance, critical illness insurance, and accident insurance. 
Disability insurance for parents: this policy may provide monthly support if you become disabled and cannot work for longer than a fixed period. To qualify for this coverage however, you will need a well-established steady income. 
Critical illness insurance for both parents and children: this type of insurance pays a lump sum if you are diagnosed with covered, life-threatening illnesses namely cancer, heart attack or stroke. You can then spend this money at your disposal. 
Accident insurance for parents and kids: when you have a serious accident that affects your ability to work or when you need to stop working to take care of your children after their accident, this policy can cover up to $250,000. 
Life Insurance for children: even if you don’t want insurance coverage for yourself, you can get it for your children. Their life insurance premiums are usually pretty affordable the younger the child is. You or they can also buy additional coverage in the future if necessary regardless of their health and lifestyle.

How can I arrange my Life Insurance if I’m a single parent?

We realize these can be some uncomfortable thoughts about your wish in the event of your death or a critical illness that stops you from working. Thinking about what you would like to happen to your children is crucial to protect them and provide for them for a long time. 
The first step is to check out some of the recommended insurance policies available, discuss with your family and friends. Then you can think of your beneficiaries, trustees, and guardians to make sure someone reliable looks after your children’s financial needs.



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