Do I need life insurance as a single parent?

Being a parent comes with its unique set of challenges, from juggling work and home life to making sure your children are supported emotionally and financially. However, as a single parent, your responsibilities are even greater, increasing the need for financial protection if anything happens to you.

While it's true that married couples and families often buy life insurance, single parents can also benefit from owning cover. We'll explain why you could need life insurance cover as a single parent and what type of policy may be best suited.

Why do single parents need life insurance?

Even as a single parent, life insurance should not be overlooked. In this situation, you are often the sole breadwinner, of which your children depend on you financially. If you were to pass away suddenly, they could be left without the necessary financial support in your absence.

Though your children may be left in the care of another parent or a guardian (such as a family member or close friend), they may not receive the same support and lifestyle they currently enjoy. In this case, life insurance could act as a safety net, ensuring that your children have some financial stability in your absence.

That way, once you die, they could be left with a cash lump sum, which could help with costs such as:

What is the best life insurance for single parents?

When it comes to weighing up life insurance options for single parents, there are a few things you need to consider beforehand. This includes your financial situation, how long you need cover, as well as how much to be insured for.

There are two main types of life insurance policies to choose from:

Whole life insurance — which remains in place for your entire life so long as you continue to pay your monthly premium. During this time, both the cost of the premium and payout amount will remain fixed. This policy tends to be more expensive as a payout could be guaranteed.

Term life insurance — which provides cover for a set amount of time, usually somewhere between 5–50 years. This policy will only pay out if you die within the agreed term. If not, the policy expires and no payout will be made. Premiums tend to be cheaper as the payout is not guaranteed.

There are three levels of cover for term life insurance:

• Level: both the payout amount and premium rate remain fixed throughout the policy.
   

• Increasing: the payout amount increases over time to prevent changes to the value by inflation, but the premium will also increase over time.
   

• Decreasing: the payout amount decreases over time, typically in line with a repayment mortgage or other debts you wish to cover. The premium remains fixed during this period.

You may also want to invest in additional protection such as critical illness cover. It can be added to your life insurance policy to provide financial support to you and your loved ones if you are diagnosed with a serious illness. This can be particularly beneficial for single parents, as it ensures that even if you are unable to work due to health issues, you could still be able to look after your children.

The right policy for you will be the one that reflects your needs. For example, if you want cover for the long term then whole life insurance could be a suitable option. Whereas if you wish to have cover for a certain timeframe, such as until your children are grown up, then a term policy may be your preferred option.

Can I name a child as the beneficiary?

You can choose a child as the beneficiary of the policy, though the policy will need to be written in trust to do so. Then, once they are 18 or older, they will be able to receive the funds directly. Before this time, you may wish to leave the money to another parent or guardian so that they can manage the funds on behalf of your child.

If you haven't arranged a guardian for your children, it's best to speak to your family or close friends to determine who would be best suited to take care of them in your absence. Ideal this should be someone you trust to provide a good quality of life for your children.

How much does a life insurance policy cost?

In the UK, the average cost of life insurance is around £8 per month for every £100,000 worth of cover. Despite this, there are several aspects that go into determining the cost of a policy, including:

Age is one of the biggest factors insurers use to determine your premiums, in which case it may be cheaper to buy cover when you are younger. Policies like level term life insurance and whole life insurance have fixed premiums so once the policy is underwritten, the cost will remain the same throughout its duration. 

If you're looking for ways to save money on life insurance, be sure to read our guide.