Life Insurance for Single Parents

Peer reviewed by
Ivana Govedarica
Certified Life Insurance Advisor

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In This Article

You’re a single parent and you probably already know life insurance helps protect your kids' financial future.

We’re here to help you figure out what type of life insurance actually makes sense for your needs. We’ll also show you how to avoid common mistakes and explain the best life insurance options for single parents like you.

What type of life insurance do single parents need?

Single parents need a type of life insurance that is affordable and flexible life insurance, like term life insurance. Term life insurance will allow you to get coverage for the period your family will need it most. This way you don’t lose money on buying permanent life insurance.

Ivana Govedarica, Certified Life Insurance Advisor, says on the topic: "Single parents actually have a bigger need for life insurance as they are most often the main and only providers for their families."

If you have a high income, need lifetime coverage and want to build cash value with your life insurance, permanent life insurance may be for you. But keep in mind that this option is more expensive and more complicated than term life insurance.

How much life insurance should a single parent have?

A single parent should have enough life insurance to replace their earnings, with some extra to guard against inflation. The Government of Canada recommends purchasing life insurance coverage that is seven to ten times your annual income.

The exact amount of life insurance you’ll need will depend on the following factors:

  • Your income
  • How much debt you have (e.g., paying off your mortgage)
  • Other expenses (e.g., educational purposes for your children)

To get a clearer idea, you can use tools like our life insurance needs calculator to see how much coverage you’ll need based on your specific life circumstances.

Choosing a policy length that covers your children

When getting life insurance, choose a policy length that will cover your children’s needs in the event of your passing. This could be until they’re done with post-secondary education.

Here are some rules of thumb when deciding on a term length:

  • Buy a term life insurance policy with a term length that covers you for only as long as you need
  • Don’t buy life insurance for the longest period available. That will be expensive and probably unnecessary
  • Life insurance renewals can be pricey due to increased risk as you age. Choose your term length carefully so you likely won’t need to renew at the end of your term.
  • If you're ill and have financial dependents, check out quote critical illness insurance to get the rates that work for you.

Who should be the beneficiary of single-parent life insurance?

As a single parent, you’ll want the beneficiary of your life insurance to be your dependents, who are likely your children.

It’s important to know that life insurance companies won’t pay out claims to minors. So if you don’t make arrangements before you pass, the court has to appoint a legal trustee to oversee the payment of your death benefit on your behalf.

Don’t like the idea of leaving your kids in a sticky situation? You can avoid this mess altogether by naming a trustee when you take the policy out (which is usually required).

Common mistakes parents make with life insurance

Below are some common mistakes parents make with life insurance based on a survey we conducted in 2021. The survey found that 77% of Canadian parents with dependent children have life insurance (but not always the right type of insurance for them!).

1. Naming a minor as beneficiary without appointing a trustee

If you name a minor as a beneficiary without appointing a trustee, the minor cannot receive your death benefit. Ivana explains: "If your kids are under 18, you have to name a trustee who will be responsible for the life insurance payout until your kids are old enough. And like the word suggests, make your trustee someone that you trust to help guide your family in this tough time."

2. Buying permanent life insurance

Buying permanent life insurance (including “universal” or “whole life”) is more expensive than term life insurance (5-15x the cost!) and is usually unnecessary. If you don’t expect to have dependents or debt well into the future, why pay life insurance premiums for the rest of your life? 

Permanent life insurance is a product that should really only be considered by high-net-worth individuals and possibly by older Canadians (55+).

3. Buying life insurance for your children

Buying life insurance for your children is also unnecessary. If you buy life insurance for your children, you’ll be locked into a permanent plan with a high monthly premium. And you’re unlikely to ever make a claim against it.

You may think of these policies as a way to put money aside for your children. But opening a savings account is a much better option to save for your child’s financial future or to prepare for unexpected funeral costs.

4. Relying only on mortgage life insurance

Relying only on mortgage life insurance will protect creditors, not you or your children. Mortgage life insurance pays off the remaining balance of a mortgage if the mortgage holder passes away. It’s also more expensive than term life insurance. And if you switch mortgage providers, the insurance policy doesn't automatically move with you.

And mortgage life insurance is unnecessarily costly because providers give everyone the same rate, regardless of their health. Below is a quick comparison that demonstrates this:

life insurance for single parents - comparing term and mortgage life insurance

5. Relying only on group life insurance

Relying only on group life insurance isn’t a good idea because it’s often insufficient on its own. You should view it as complementary to a more robust term life insurance policy.

Group life insurance typically covers one to two times your annual salary. So it doesn't offer enough income protection for most families to cover end-of-life costs or ongoing expenses after future earnings are suddenly taken away (i.e. childcare, education costs, mortgage payments).

Best life insurance options for single moms and dads

We’ve listed the best life insurance options for single moms and dads and why they might be right for you. You can use this information to narrow down which type of life insurance makes the most sense for your family. 

Term life insurance for single parents

Term life insurance is best for single parents because it’s an affordable way to protect your family’s financial future. Term life insurance offers protection for a specific period (of your choosing), so premiums are more affordable than whole life premiums. 

Term policies are also more flexible than other types of life insurance because you can choose the coverage amount and term length that suit your particular needs.

Group life insurance for single parents

Group life insurance is usually inexpensive so it may be a good option for single parents if they can’t afford a more robust policy.

The downside of group life insurance is that it usually has a low coverage amount (one to two times your annual salary). This is likely not even enough to pay off your remaining mortgage. And if you leave your job, your coverage ends. 

If you’re choosing between group life insurance and term life insurance, a term life insurance policy is a better bet. It can cover your mortgage, debts, and your family’s current and future expenses.

Critical illness insurance for single parents

Critical illness insurance is helpful for single parents as a one-time lump sum you receive if you’re diagnosed with an illness. But it is not a replacement for life insurance, which will support your family if you pass away.

Key facts about critical illness insurance:

  • It helps you pay for expenses related to your diagnosis and/or other living expenses while you recover
  • It can be especially helpful if your health insurance doesn't have the coverage you want
  • The illnesses and health conditions it covers will depend on your insurance company
  • You cannot buy critical illness insurance for a pre-existing condition or illness

The Financial Services Commission of Ontario notes that your coverage can vary depending on the severity and/or conditions associated with your illness. “For example, if you are diagnosed with a type of cancer that is treatable and that results in minimal ‘down time’, you may not be eligible to make a claim.”

In summary: Term life insurance is likely the best option for single parents

If you’re a single parent looking to buy life insurance, term life insurance is an affordable, flexible option that will help secure your family.

You can get a term life insurance policy that best works for how much insurance you'll need and for however long you’ll need it.

Remember that every day that you don’t have protection, the more likely you are to pay higher rates later because you run the risk of getting sick. And the older you are, the higher your rates will likely be. So now is the best time to get life insurance.

If you're an elderly single parent, life insurance for seniors in Canada can help provide you with a legacy gift for your loved ones.

FAQ: Life insurance for single parents

Why should single moms and dads consider life insurance?

Single moms and dads should consider life insurance because, without it, it's likely that income their families rely on will not be replaced if they pass away.

Having a policy in place, even a small one, is better than nothing at all in order to protect your kids' financial future.

How should you change your life insurance policy after a divorce?

After a divorce, the Government of Canada recommends that you should change your life insurance policy by:

  • Updating all personal information in your policy
  • Changing the beneficiary because if you don’t remove your ex-spouse as a beneficiary, they can still get your death benefit

If you are not the policyholder, you should consider getting your own life insurance plan as a single parent. And if you’re the primary caregiver for your children and are financially dependent on your ex-spouse, you should talk to them about making you an irrevocable beneficiary. This way they cannot remove you from their insurance plan.

Is my ex-spouse entitled to my life insurance?

Your ex-spouse can be entitled to your life insurance in these cases:

  • If you don’t remove them as a beneficiary
  • If they are an irrevocable beneficiary on your insurance policy (then you’ll need their permission to remove them)
  • If it’s a stipulation of your divorce settlement

Certified divorce lawyer Ken Maynard says, “the divorce settlement usually stipulates that there is life insurance coverage with the child or the receiving spouse as the beneficiary. This is in order to ensure that if the spouse paying alimony dies, there are still available funds to cover the divorce obligations.”

Laura McKay

COO & Co-Founder
About the Author

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