You have young kids and you are concerned about what would happen to them if something happens to you. Your concern is justified.

This Guide will inform you about the various uses of life insurance and whether life insurance would be useful to you in your situation.

What Types of Life Insurance Are Available to Single Mothers?

There are two main types of life insurance and variations on each type.

Term Life Insurance for Single Mothers

Term life insurance can cover you for the years you think you’ll need coverage, such as when your children are young and growing up. You can buy a term life insurance policy for a specific term, or the number of years, such as 10, 20, or 30 years. If you die during this term, the policy pays the death benefit.

Term life insurance is fairly inexpensive and easy to get. It is sufficient for the insurance needs of most families. If you are interested in obtaining one or more term life policies, you should get them sooner rather than later as the premium will go up the older you get.

Whole Life Insurance, or Permanent Life Insurance for Single Mothers

Whole life insurance policies provide you with coverage for your entire life. Unlike Term Life Insurance policies, these policies have a cash value that grows tax-deferred as you pay premiums. It is possible for the policyholder to borrow against the cash value or cash the policy out at any time.

Whole life insurance is more expensive and more difficult to procure. If you are considering whole life insurance for your family or as an investment vehicle, you should contact your financial advisor.

Life Insurance on Yourself

Whether you are the primary caretaker or the primary breadwinner, you need to take out a life insurance policy on yourself. Why?

Insuring the Primary Caretaker

If you are the primary caretaker and you have minor children, if you pass someone else will have to take care of them. Who that someone is should be determined well in advance, with that knowledge.

Keep in mind that minor children cannot be named as beneficiaries on your life insurance policy. You should name an adult guardian, then their guardian would have use of the death benefit funds to raise your children in your absence. The unspent remainder when the children turn 18 goes to them directly.

You can also work with an attorney to create a trust for your children and name the trust as the beneficiary of the policy. That way the money is controlled by a Trustee for however long you’d like – until the children turn 18, or 20, or 25. It is your choice.

How much insurance should you take out? It depends upon how many children you have, how old they are, how much money is required to fund the family’s lifestyle, how many years you want to cover, and if you want to provide for extras like college expenses.

For example, if you have three young children, say, ages 4, 8, and 9, you may want to take out two separate term life insurance policies, one with a longer-term but a lower death benefit to fund the 4-year-old’s lifestyle, and one with a larger death benefit but a shorter term to fund all three children until the older ones are 18 and 19.

Insuring the Primary Breadwinner

If you are the primary breadwinner it may seem obvious to you that you can use life insurance to replace your income should something happen to you. Again, you can get two separate policies running concurrently and adjust the death benefit accordingly.

Life Insurance on the Other Parent

If you are receiving spousal support or child support, chances are the family law judge ordered your ex to maintain life insurance in an amount that would compensate the family should something happen to him and the support payments stop. If a judge has not ordered that, ask him or her to via motion to the court.

Life Insurance on Your Children’s Grandparents or other Caregivers

If your parents or other family members help with raising your children, you might consider insuring them in an amount that will replace the cost of their services should they die. Child care, house cleaning, preparing meals, transporting the kids: all of these can be quantified and a dollar amount attached. Such term life insurance should end when the children no longer need the services provided.

Any term life policy can also provide for end-of-life expenses so that your family doesn’t have to worry about finding those.

Stop worrying about what your children will do if something happens to you. By reading this article, you have already started the process of educating yourself about your options. Act now to get the life insurance your family needs. You’ll be amazed at the peace of mind this gives you.

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