Life Happens: Why Life Insurance for Single Moms is a Must
All parents benefit from having some kind of life insurance, especially when their children are young and financially dependent. Why? Because, in the event of a parent's death, it replaces the income that keeps their little ones fed, clothed, housed, and more.
It seems pretty obvious that single parents face greater financial challenges than couples. Not only does a solo parent typically live on one income, but they face additional costs that come with raising a child on their own.
For many single moms, the challenge is heightened by the reality that in 2023, the average earnings for women were 22 per cent less than for men¹. So squeezing life insurance premiums into a single-income budget can be tough. But the potential benefits of coverage are typically well worth it.
Why life insurance for single moms is so important
All parents benefit from having some kind of life insurance, especially when their children are young and financially dependent. Life insurance is a vital part of a two-parent household’s financial plan because it replaces the income that no longer comes in when one spouse dies.
The same thing applies to single moms, who also need to think about the loss of income and how it would impact their family. But the approach to buying life insurance, choosing an appropriate amount of coverage, and putting additional support systems in place is more nuanced because there isn’t another parent to pick up the financial slack.
Types of life insurance for single moms
The best life insurance for moms is a policy that anticipates the needs of a child while being affordable enough to not put too much strain on the parent’s income. A Serenia Life advisor can help you choose between these common options.
Option 1
You could choose term life insurance to cover yourself from now until your children reach an age when they should be able to cover their expenses and save for the future as working adults.
Advantages
- You can choose a term of 10, 20, or 30 years based on your needs
- The cost is low when you’re a young mom in good health
- You can convert to whole life insurance later in life
Option 2
If retirement is on the horizon and you want to give your children the opportunity to pay down debt or put money aside after you’re gone, Term to 100 life insurance might be a good option. As long as you make the affordable monthly payments until your 100th birthday, you’ll remain covered for life.
Advantages
- You can spend more of your retirement income knowing that your insurance policy will likely provide for your children.
- You may not need a lot of coverage if you have other assets to cover your final expenses.
- You can cancel at any time if you feel your kids are already well taken care of.
Option 3
If you want to give your child or children a leg up in life, whole life insurance provides the same kind of death benefit (i.e., a payment made to designated family members, or other loved ones, of your choice after you die) as term life coverage, but it also functions as a low-risk investment that you can access later in life to pay for things like a child’s post-secondary education.
Advantages
- If you live a long and healthy life, the cash portion² of your policy could increase substantially, letting you leave a large inheritance to your children.
- Coverage is permanent as long as you continue to make payments. (Wish there were an end in sight? Consider 20-pay whole life insurance.)
- The death benefit is guaranteed to pay out.
Not sure what’s best for you? Speak to a Serenia Life advisor and let them help you choose the best life insurance for single moms.
How to find affordable life insurance for single moms
Like most things you buy, there is a big difference between cost and value. When you begin to compare life insurance options, your advisor will help you understand what your policy will be able to do for your children in the event of your death. In a typical consultation, an advisor will help you answer some upfront questions, like the following.
Where will the money come from?
It might be easier than you think to find money for insurance within your overall budget. That’s because owning a life insurance policy can take pressure off other parts of your financial plan. For example, you may need to put aside less money in short-term savings if you know that your term life insurance policy will cover final expenses and leave your children with money. Or you might buy a whole life insurance policy and put a little less in your retirement accounts. These are the calculations a knowledgeable advisor can help you make.
Which insurance provider is right for me?
There’s a lot to be said for working with insurance providers who share your values about the community or the environment. Insurance brokers can help you identify companies that offer great insurance and align with your life view. For example, many Serenia Life members like that they can apply for $150 in an seed funding (+ a $100 post-event donation) to support causes they care about or make a difference in their community.
What kind of extras can I add to my policy?
The death benefit is the primary benefit of life insurance. And access to tax-free cash is a bonus that comes with whole life insurance. But many providers also offer ways to customize your coverage with affordable riders (i.e., coverage that gets added on to an insurance policy to provide additional payouts under specific circumstances) and no-cost fringe benefits for policy owners.
Additional considerations
It’s one thing to work with an insurance advisor to choose the right type and amount of life insurance coverage as a single mom. But once the insurance company has paid out, it’s another thing to be confident your wishes will be followed, and your child’s best interests are served. As part of the insurance planning process, your Serenia Life advisor can help you put these essential components in place.
1. Will and power of attorney
As a single mom, it’s critical that your wishes are written and readily available to people who can legally enforce them. When you purchase life insurance through Serenia Life, you are entitled to a free will and power of attorney through our online provider, Willful. These essential documents can act as your voice after you’re gone.
2. Naming of beneficiaries
You want your life insurance payout to provide for your children – but if they are not old enough, or ready to handle the responsibility that comes with inheriting money, you’ll need to assign a trustee who will make sure that your wishes are carried out.
Choosing a trustee
If you’re lucky enough to know someone who has the time, maturity, and good money sense to manage financial affairs on your behalf, you can ask them to be the trustee of your estate (i.e., the sum of your financial assets and liabilities at the time of your death). It’s customary, but not legally required, to compensate that person in some way for their time and effort.
An alternative to choosing a friend or family member is to engage a professional trustee. Most banks and insurance companies offer trustee services and clearly outline how they will be compensated.
Either way, your trustee needs to fully understand your wishes and have access to important documents. This guide will help you organize the information your trustee will need.
Is life insurance for single moms worth it?
We believe life insurance for single moms is not only worth it, but essential. In the event of the unthinkable, this is one thing you can do to minimize stress and give your children the financial security that you would have provided if you could.
Getting started is a simple matter of booking a 15-minute call with a Serenia Life advisor and getting a free quote. We’ll help you choose the best coverage now and we’ll be here to help you adjust your policy whenever your situation changes.
Disclaimers
¹The Labour Market Information Council (LMIC) website. Equal Pay Day: Exploring wage disparities in Canada. By Laura Adkins-Hackett, Brittany Feor and Suzanne Spiteri | April 8, 2024
²Cash values are accessible via a withdrawal, policy loan or surrender. These may be subject to taxation and a tax slip may be issued. Accessing the cash value of the policy will reduce the available cash surrender value and death benefit.
