It’s been said that being a single parent can mean twice the work and twice the tears, but also twice the love and twice the pride.
When it comes to financial planning and making sure your family is protected, you could say it’s also twice the stress and twice as important.
In fact, the regular “what-ifs” of parenting can be even more daunting in a single-parent household. Being prepared and planning for the unthinkable can help set your mind at ease.
“You need to think about how your family is protected financially and otherwise, should something happen to you,” advises Wendy Hope, vice-president, external relations for the Canadian Life and Health Insurance Association (CLHIA).
In Canada, single-parent families comprise 16.3 per cent of all families and that number is growing. Four in five of those families have solo moms, according to the 2011 census.
Though it may seem overwhelming, if you’re a single parent there are steps you can take to ensure your kids will be well cared for.
Your plan should start with a will that specifies your children’s legal guardian and defines how your assets will be distributed. You will also need to name a power of attorney to decide who will have the legal right to make decisions if you are unable to. While there are some low-cost will planning solutions available, legal guidance is recommended.
“The CLHIA website provides a “virtual shoebox” where you can record all of your important personal and household information, including helpful documents that you may not have even thought to include”, Hope says.
“Should something happen to you, you don’t leave your family in a position where nobody knows where anything is,” she says.
As the sole provider for your children’s future financial needs, a life insurance policy on yourself could provide the cash to ensure they will have a bright future. How much you’ll need depends on the age of your children and the goals you have for them (including education). Your current savings and affordability will help determine the type of life insurance to purchase. The CLHIA has a financial needs worksheet but the best approach is to consult with an insurance advisor to gauge your individual needs, Hope suggests.
Other coverage to consider
Your advisor can also discuss options for other perils that may impact your family’s future. For example, disability coverage provides an income if you become disabled and unable to work for a specified period of time.
While many employers offer disability insurance as part of their benefits package, it’s important to understand what it actually provides.
Similarly, critical illness insurance provides a lump sum payment should you be diagnosed with a specified illness.
Planning ahead is the best way to put your mind at ease. Work with your advisor to create a budget that will allow you to build an emergency fund for short-term setbacks. Then take the steps listed above to ensure that you and your children are protected and can enjoy twice the quality of life! Looking for a financial planner? Advocis, The Financial Advisors Association of Canada, can help. Their online tool can help you find a Certified Financial Planner in your area.