Your insurance checklist will likely include these types of insurance:
- Life insurance
- Car and home insurance
- Major medical insurance
- Disability insurance and critical illness insurance
You may have some basic coverage in many of these areas through work, but it may not be enough.
Life insurance If you have no children yet, you may want just a small policy to cover your funeral costs or any debt. In fact, you may already have enough coverage from a plan at work. If you have large credit card debts or big mortgage payments, you will need more. You may also need more insurance if you look after aging parents.
Tip: Single parents really need good life insurance because their children rely on them for everything. If you pay child support, your divorce agreement may require you to have enough life insurance to replace the income your family was receiving from you.
Not sure you can afford the insurance you need? Some single parents choose a shorter term life insurance policy as a base. Or, they get a mix of term and permanent life insurance. As their income grows, they may move to all permanent insurance.
Others choose a smaller life policy. Then they get extra insurance for major debts, such as a mortgage or car loan.
Car and home insurance Everyone should have home insurance. Everyone who owns a car must have car insurance, by law.
Major medical insurance Extra medical insurance can help you cover the cost of medicine and special services. You can often get some added coverage at work. Even if you have to pay part of the cost yourself, it still costs less than buying it on your own. Most people who have a plan at work pay just 20% of the total cost.
Tip: If you used to be covered under your partner’s plan and that coverage has stopped, you may be interested in buying a major medical plan on your own.
Disability and critical illness insurance This insurance becomes even more important when you have others depending on you. You may have some coverage at work, but is it enough? The experts say you should aim to replace at least 60% of what you make with disability insurance.
Another option is critical illness insurance. It provides a lump sum if you are diagnosed with a serious medical condition, such as cancer, stroke, heart attack, Alzheimer’s, or Parkinson’s disease.
Tip: If you can’t afford this insurance, make sure you have a large emergency fund. Or, get creditor insurance for some of your major debts, like your mortgage. That should help you get through a short-term crisis.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.