If you are a single mom, chances are your children are dependent on you for most of their support. And I’m sure you’ve thought about who would take care of your children if the unexpected happened and you died. It’s a complex subject. If there is a second parent involved who you are comfortable with, and who could absorb the cost of raising the children, that’s one thing. If there’s not, you must have spent at least a little time considering who you would prefer to take over the care of your kids and whether they actually would or could. Or you may be avoiding these questions and if you are, you’re not alone

  • Fifty-nine percent of unmarried mothers lack life insurance.
  • Unmarried fathers are least likely to have life insurance of any group of parents, whether married or single.
  • Sixty percent of unmarried fathers with household incomes between $50,000 and $250,000 have no life insurance.

No parent likes to consider their death, the possibility of their children will growing up without them. But if your death would cause financial hardship for them—or for the person who would raise them– insurance is necessary. And as a single parent, it is even more important that you consider these questions.

No one is promised a tomorrow, and your children’s futures may depend on how well you provide for them in the event of your death. Having a good life insurance policy will give you and the potential guardian peace of mind. You may think that you cannot afford a life insurance policy, but, depending on what type of policy you choose, insurance may be more affordable than you thought.

Here are a few considerations when deciding what type of policy you need and how much the payout on the policy should be:

The Guardian You Choose – If you have not selected a guardian for your children, do so. Most single parents have an idea who would step in to care for their children in the event the parent died, but you must legally name this person or persons, or they may have to go to court in order to be awarded legal guardianship, an expensive process. You must also consider whether they would need to alter their life or residence if they found themselves with children to raise. Is the person you want to raise your children the same person you want to make decisions about how the insurance money is allocated? If not, consider setting up a trust for your children and naming the trust as your beneficiary. A bank or attorney of your choice can administer the trust, but you need to make these arrangements beforehand with a lawyer who specializes in trust law.

Deciding How Much Coverage You Need – One way some people think about how much insurance they need is in relation to their current salaries, with the rule being that you should have coverage that equals 7-10 years’ salary. If you earn $60,000 per year, then you should purchase between $420,000 and $600,000 in insurance. Seems like a lot, doesn’t it? But it doesn’t have to be as expensive as you might think. With that in mind, here are the variables that arise when making such a decision.

  • The ages of your children today. How long a period needs to be covered? If your children are ages 10 and 4, and you want to cover their expenses through college, you would need more coverage than if your children were older and unlikely to go away to college or to need full tuition paid.
  • Who would act as their guardian? Does this person live with you? Live in another state? Would they move to care for your children or need to sell your house or theirs? What that person would need to care for your children. Do your children currently attend private school or lessons and activities you want to continue? Do you have a child with special needs who requires treatment not covered by health insurance? The cost of maintaining the life you want your children to lead comes with a price tag. Add these costs to your calculation.
  • How much debt you have. Any debt you carry would be taken care of by your estate first, and if that debt exceeds your estate value, creditors would look to the insurance payout to cover outstanding balances, so you need to factor what you owe into the decision about how much insurance to buy.
  • The type of policy you choose and its cost. There are two basic types of life insurance, term life insurance and whole life. Term life insurance is for a specific amount of time, usually from ten to twenty years. One benefit of term insurance is that you can purchase a policy to cover only the period during which you are actively raising your children to adulthood (generally until they are 21 or out of college). Once the children are raised, you can cancel the policy or convert it to a whole life policy if you desire. And term life insurance is surprisingly affordable. Depending on your age and how much coverage you elect to purchase, your policy is likely to cost you less than $30 a month. If you would like help figuring the cost of a policy, there are calculators online that are quick and easy, once you have a general idea of how much coverage you need. Be sure to get several quotes from different insurance companies.

Caring for and protecting your children is something you do every day of your life. That caring doesn’t have to stop if you are no longer with them.