Almost two-thirds of working single mothers own life insurance – exceeding the 57 percent level for all women – but they remain significantly underinsured, according to a recent study by LIMRA, an insurance research organization.
The organization found that single mothers in the U.S. are struggling to provide sufficient life insurance safety nets for their families. The report mirrors results from other studies, which show that single parents often forgo life insurance protection due to more pressing financial concerns.
A lack of life insurance extends across all income levels and is creating an insurance gap that could be potentially devastating to families and children (if their parent were to die).
It's not just single mothers who lack adequate coverage. Genworth Financial’s separate 2011 Lifejacket study found that 69 percent of all single parents are uninsured.
Greg Bucko, Genworth director of customer innovation, says the numbers surprised him.
"It was surprising to find that single parents – the group arguably the most in need of life insurance – are among the highest uninsured in the U.S.," Bucko says.
While single mothers are more likely to have life insurance than single parents in general, they often don’t have adequate coverage, the study found. Only one-third of those interviewed felt they had a safety net that would allow their families to cover expenses far into the future.
A recent Organization for Economic Cooperation and Development study found that 25 percent of American children are being raised by single parents.
According to LIMRA figures, eight out of 10 single moms are at least 25 years old and more than half of them are divorced. Roughly 25 percent earn incomes above $50,000.
Although LIMRA found that more than one-half of insured single mothers know they are underinsured, only one-fourth say they are likely to buy more life insurance in the next 12 months. The No. 1 reason for not buying additional coverage was other financial priorities. In addition, 70 percent of single mothers are convinced that working with a financial adviser is too expensive.
"When consumers are faced with uncertainty regarding a financial decision, they often end up doing nothing,” says LIMRA spokesperson Catherine Theroux.
William Walthouse, a financial services representative with Dowd Financial, offers these tips for parents who need life insurance:
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