Can You Afford Life Insurance?

18
December 2018
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You’ve known for a while now that getting a life insurance policy is the responsible thing to do.

If something were to happen to you, your family could suffer financial difficulties, paying for a funeral and struggling to make ends meet. You know that a life insurance policy could help them through the painful transition of losing you as well as help them maintain the lifestyle that they are accustomed to.

But you don’t think you can afford it, sure that high-paying coverage must be out of your budget.

This is a common misconception.

Not only is life insurance affordable, but you can probably get much higher coverage than you realize for less than you imagine.

Can You Afford Life Insurance?

The short answer: Yes.

While some types of life insurance cost more than others, there is usually an affordable option that assures your loved ones will be cared for in the event that you pass away.

Covering Your Young Family for Less

For many, it is hard to imagine how you could carry on life normally if your spouse was no longer here to help with childcare and/or bringing in income.

Term life insurance is there to fill in the monetary gaps that are left in your loved ones’ lives should you pass away.

In some unique circumstances it is advised to purchase a lifelong whole life policy. More commonly a term life insurance policy is the soundest way to pay low premiums while assuring that your family is protected from financial strain, should the unexpected occur.

A term policy will pay out death benefits to your beneficiaries should you pass away within the term of the policy, generally between 20 or 30 years.

This secures coverage of your family during their younger years, with your policy expiring after your children are older and more self-sufficient, leaving less of a financial burden on your spouse.

Premium amounts are locked in for the life of the policy, ensuring that changing health conditions won’t increase the amount of your payments over the course of your chosen term.

With all of the bills that you already have to cover every month, the thought of adding another can be daunting.

You may think you could never afford premiums on a policy with death benefits equaling $250,000, $500,000 or even $1M.

That assumption couldn’t be farther from the truth.

With a term life insurance policy, you can pay a very reasonable monthly rate on coverage that pays out big if you were to pass away within the limits of the policy.

Imagine stopping into your favorite coffee shop every day on your way into work to grab a large specialty drink, at four bucks a pop.

That daily latte could easily cover the cost for your term life policy. In fact, you could probably pay for your policy and still stop into the coffee shop a couple times a week.

And as your policy term comes to a close, many insurers allow you the option to convert your coverage over to a whole insurance policy.

Lifetime Coverage Comes at More of a Cost

While whole life insurance does have additional perks – such as lifetime benefits and an additional savings component – it comes with a much steeper price tag.

There are certain instances where you should consider investing in a whole life policy, such as if you want a steady and low-risk investment that you can borrow against in the future, if you’re worried about a future decline in your health, or if you have a lifelong dependent that will need insurance benefits for continued care in your absence.

Locking in premiums and ensuring that you will remain covered regardless of future health conditions, whole life is a more attractive type of insurance that comes with significantly higher premium payments.

Why Term Life Insurance is More Affordable Than Whole Life

It’s simple: there is a lower chance of your insurer paying out on your term policy.

Whole life policies, however, come with guaranteed death benefits. If you make your premium payments, your insurer will pay out on a whole life policy 100% o f the time.

The majority of people outlive the limits of their term life policy, and the insurance company retains the premium payments. It’s good business for the insurance company and a great safety net for young families.

You don’t have to break the bank for good life insurance coverage that protects your family. You may just need to forego that grande latte a few times a week instead.

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