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Insurance for single parents: What you need if you’re doing it alone

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7 mins

Families come in many different shapes and sizes — seniors with the kids grown and out of the house, working couples with no children, the traditional nuclear family, and more.

One of the more prevalent family forms in America today is the single-parent family. According to a Pew Research Center study, the U.S. has the world’s highest rate of children living in single-parent households — almost 1 out of 4 kids under 18 live with one parent and no other adult.

Single parents have the challenge of making many important decisions on their own — the best schools for their kids, the childcare situation when they need to work, if the kids need braces, and many other day-to-day choices. A vital area of their financial life that single parents must address is the matter of insurance. Along with the obligatory auto and home/renters insurance, they must evaluate, select, and pay for “the big three":

  • Health insurance
  • Life insurance
  • Disability insurance

If you’re a single parent navigating the sometimes uncertain and unclear waters of the world of insurance, this article will help you understand what you need, why you need it, and where to get it.

Let’s break down the big three for you, starting with health insurance.

Health insurance for single parents

Let’s face it — you need health insurance. Infants and kids will need to see a doctor or visit a hospital because of an illness or accident. And, the same risk is there for you.

According to a CNBC report on healthcare spending, Americans spend more than twice as much on healthcare than they did in the 1980s, averaging about $5,000 per person in 2018, with the average family spending over $6,000 out-of-pocket.

Short stays in the hospital can easily cost $10,000, and a trip to the emergency room for a broken arm will set you back at least $1,500. Of course, health insurance isn’t inexpensive, but it’s invaluable when you’re facing substantial medical expenses, and paying out of pocket isn’t something you can readily do.

There are many different types of health insurance to choose from: HMO, PPO, indemnity, critical care, high-deductible, supplemental, and more. However, let’s focus on the two that single parents often choose to use: the HMO and the high-deductible health plan.

HMOs are popular with single parents raising younger children and who spend a lot of time in doctor’s offices. HMOs have a minimal co-payment for doctor and hospital visits, and there is no annual deductible. With an HMO, you’ll be protected against large out-of-pocket medical expenses and have low-cost office visits.

That’s a great combination, and why single parents need to consider an HMO. Compared to other types of health insurance, an HMO could be classified as middle-of-the-pack when it comes to your monthly premium.

If you’re concerned most with cost, less with having doctor’s office visits paid for, yet protecting yourself from medical bills that could bankrupt you, a high-deductible health plan (HDHP) is a viable option.

With an HDHP, you’re willing to pay the first $1,400 in medical expenses for an individual or $2,800 for a family to receive the benefit of reasonable monthly premiums. Some families will choose a deductible of $5,000 or $10,000 to further lower their monthly premium, yet protect against catastrophic medical expenses.

If you like the idea of the HDHP, you can supplement it with other small policies to round out your coverage. Accident plans and critical care insurance are reasonably priced and pay you cash directly for some medical expenses, which will help you pay your higher deductible.

If you don’t have group health insurance coverage where you work, you also can look into the Affordable Care Act option. Open enrollment runs from November 1st through January 15th.

Life insurance for single parents

Owning life insurance can help you sleep better at night, knowing that if you were to die while your children were still financially dependent on you, they would be on solid ground financially. You could rest assured that the money to help them meet their daily needs would be there, college could be paid for, an emergency fund can be set up for them, and other financial needs would be met.

There are several different types of life insurance to consider:

If you want a life insurance policy that benefits your kids if you die and saves money for you when you get older, permanent life insurance, like whole life or universal life, would meet your needs.

A portion of every dollar you spend in premiums on a **permanent life insurance **policy is applied to the death benefit, which would be paid to your kids or a guardian if you passed away, and a portion of the premium goes towards a cash value account (savings) that you can withdraw or borrow from while you’re alive.

From a cost standpoint, term life insurance is the best type of life insurance for you to have. This is because it doesn’t accumulate cash value; it is purely bought for its death benefit. Because of this, premiums can be as much as 75% lower than a comparable permanent life policy.

Disability insurance for single parents

Disability insurance isn’t the most publicized or talked about of the big three, but it’s a must-have for a single parent. As the sole breadwinner in your home, if your paycheck stops coming, eventually so will your groceries, utilities, and mortgage/rent payments. You also won’t be able to pay the premiums on your health and life insurance.

There are two types of disability insurance to choose from: long-term and short-term.

  • Long-term disability insurance can start paying you up to two-thirds of your income as soon as 30 days after you become disabled from a sickness or accident and can’t work. It can last up to retirement age if you become permanently disabled.
  • Short-term disability insurance pays you weekly benefits for as long as six months if you can’t work because of a disability. Up to two-thirds of your income is paid to you directly each week, and benefits can begin in as little as seven days.

Disability insurance is affordable - premiums typically run from 1% to 3% of your annual income and are paid monthly. If you must have a paycheck every week or two weeks – you must have disability insurance.

Breeze helps single parents find affordable disability insurance. Get a quote!

Where to buy your insurance

While insurance agents are still available to guide you through the choices you need to make concerning the different coverages, applying for the big three online is extremely easy. First, you’ll be asked a series of questions to customize coverage to meet your needs; you can then apply online and make your first premium payment.

It isn’t easy being a single parent with children. You may be facing financial challenges as you raise your kids, but having insurance for your family’s financial protection is imperative. You may have to trim your budget to find the money for premiums, but your stress level will drop knowing your family will be financially secure in the event of illness, disability, or death.

Having grown up in upstate New York, Bob Phillips spent over 15 years in the financial services world and has been making freelance writing contributions to blogs and websites since 2007. He resides in North Texas with his wife and Doberman puppy.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

— Published October 7, 2021
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