Several years into the expanding economy some people are still struggling to pay their bills and to even survive. Money saving gurus and blogs are all over the place, recommending that you save money on everything from laundry detergent to car repairs. Everything it seems is on the table when it comes to saving money – and that can include life insurance.
Though no sources come out recommending that anyone cancel their life insurance, it’s often a short walk between lowering your life insurance premiums, and going without insurance entirely. After all, life insurance has no immediately value, and if you’re looking to seriously cut back on your living expenses, it can easily become fair game.
But going without life insurance is a bad money saving strategy.
A Lot of People Go Without Life Insurance
Though most people have a basic understanding of the necessity of having life insurance, they often go without it anyway. A LIMRA study published in September, 2014 revealed that less than half of middle market consumers ages 25 to 64 have individual life insurance coverage.
Half the population don’t have any kind of life insurance! In a way, it makes sense. After all, auto insurance is mandated by state law in most US states. And healthcare is now a requirement under the Affordable Care Act. Life insurance has no such legal requirement, and as such people often feel that it is no more than optional.
In that way, it makes it a potential budget cutting target for people who are looking to reduce their living expenses.
Self-Insured is Un-Insured
If you are attempting to go without life insurance, you’re actually planning to be self-insured. No, you may not think that consciously, but that will be the reality of your situation. You will be proceeding with the assumption that there are sufficient assets to cover your final expenses, and provide living expenses for your loved ones in the event of your death.
Now there are some people who are worth a substantial amount of money who may qualify as self-insured, but even that proposition is questionable.
However for the vast majority of people, attempting to be self-insure is a virtual state of being uninsured. And that is a very shaky situation for anyone who is dependent upon your income for support.
Going Without Life Insurance When You Can’t Afford It Is Bad Enough, but…
There’s no question that there are people who are facing financial obstacles that make
life insurance completely unaffordable. That’s an unfortunate position of be in, but one that no one should ever choose willingly.
But if you decide to go without life insurance in an attempt to save money, that’s exactly what you’ll be doing – you’ll be choosing to jeopardize the financial survival of your loved ones in the event of your death.
Is that really worth saving a few hundred or a couple thousand dollars per year?
Going Without Life Insurance Will Only Save You Money If You Don’t Die
This is a fundamental dilemma for anyone who goes without life insurance willingly. It will only save money if you don’t die. But if you do, your loved ones will be left in a hopeless situation that will be out of all portion to the amount of money that you saved as a result of not having life insurance.
Going without life insurance is one of those penny-wise and pound-foolish decisions that people often make (at least 50% of them, according to the LIMRA study). By choosing to go without life insurance while you are alive, you will be dooming your dependents to massive uncovered expenses and liabilities in the event of your death.
Worst Case Scenario: Get the Most Life Insurance for the Lowest Premium
If you are looking to trim your budget and to save money, the better option is to simply look for the most life insurance you can buy at the lowest possible premium. And there are several ways that you can do that:
- Get a term life insurance policy, instead of whole life; you can generally buy several hundred thousand dollars worth of coverage for just a few dollars per month.
- Cut back on the amount of coverage you have, by reducing the face value of your policy, and therefore the annual premium.
- Eliminate certain policy riders and provisions that are increasing the cost of your premium.
- Find other expenses to cut in your budget that will have a less negative impact in the event of a catastrophe.
If you are looking to cut your life insurance expense as part of an overall attempt to improve your budget situation, don’t cancel your life insurance policy. Instead, give us a call and see what we can do to help you find the less expensive life insurance policy.
