No matter what the circumstances, the life of a parent is never easy. You are not only mom or dad; you are their teacher, coach, cheerleader, chef, driver, listener, supporter, nurse, and financial provider. You rarely wear just one of these hats but find yourself juggling many at the same time. No matter what hat, or collection of hats, you are wearing at a given moment, one thing is for certain, you unconditionally want the best for your children, now and in the future.
It is never easy to think about your children having to live without you; however, as a parent, it is important that your wishes for the future are fulfilled.
Financial Planning: A Roadmap to Proper Planning for Your Family’s Future*
This includes (but is not limited to):
1. Estate Planning – It is essential to make arrangements for your children if you become incapacitated or pass away.
Assign a guardian. Guardianship specifies who will take care of your minor children if you are unable to.
Draft an official Will to designate the beneficiaries of your assets. Ensure your will is kept up-to-date as state statutes can change.
Power of Attorney. Especially for parents with minor children, it is important to ensure that your assets will be properly managed if you are no longer able to make financial decisions.
Health Care Proxy. In the event you lose capacity to make medical decisions for yourself, it is important to ensure that an adult is appointed and understands your healthcare wishes. End of life decisions will not be the burden of your minor children.
2. Purchase Life Insurance – Life insurance can be extremely important for parents. However, what you purchase will depend on your family and finances. To determine your life insurance needs, calculate what you want the proceeds to do (see below for more details).
3. Explore Disability Coverage– Disability coverage can be crucial for parents, especially those who don’t have a second income to cover the gap. Check with your employer to see whether you have this benefit. Generally, you will get a reduced income amount when you file a claim for disability. Purchasing a supplemental disability income product can help fill the gap.
Let’s focus on the first destination on your roadmap to financial planning, life insurance. It is important to plan for your children’s future, if you are no longer able to care for them. Taking out a life insurance policy will help cover your child’s living expenses and provide them with the opportunity to fulfill their needs.
How much life insurance will your family need?
The amount of life insurance that will meet the needs of your family includes a number of components; therefore, it is important to conduct a needs analysis.
Consider the following factors in determining your need:
- Final expenses – did you know that funeral and burial expenses average $15,000?
- Annual living expenses – you want to ensure your children are able to maintain the standard of living you have set for them.
- Outstanding debt – car loan, mortgage payment, student loan debt, etc.
- Loss of income – how much would your family need in the event of your untimely passing?
- Cash on hand – how much do you currently have in liquid assets?
- Existing life insurance – what benefit will be paid on any life insurance policies you already have in force?
Your needs analysis will change throughout each of your life stages; therefore, it is important to have an annual policy review with your insurance provider.
What does whole life insurance really mean for a single parent?
Yes, the importance for your child to have funds for final expenses, debt, and the loss of income is undeniable; one of the best aspects of whole life insurance is your ability to leave a legacy to your family. You can make your child’s dream of going to college, planning a wedding, putting a down payment on a house, etc. come true! Through each of these milestones a piece of you will always be with them.
We Are Here For You!
Let us help provide peace of mind for your family. For more information on whole life insurance from PFP | The Family Security Plan®, visit our Whole Life Insurance page or call 855-789-4976 to speak with a dedicated PFP | The Family Security Plan® Representative.
Written By: Amanda Keefe
*Content is not legal advice. Please consult your financial adviser or attorney for more information.