What to Do if You Can’t Afford Your Life Insurance Premium
June 1, 2018
One of the most common questions that customers have about life insurance is how much it will cost them. Most people have a good understanding of the cost before they purchase their policy. You get a quote or illustration when shopping for a policy. Your agent will provide a clear picture of the cost of the policy at the time of purchase.
However, life insurance costs are based on your health and lifestyle at the time of purchase. As you grow older, encounter health problems, or live an unhealthy lifestyle, buying a life insurance policy becomes costlier.
Alternatively, there’s no predicting when you might lose your job or incur a number of other expenses in your personal life. Because of this, some life insurance policyholders unfortunately find themselves in a situation where they think they cannot afford the cost of their coverage.
A huge misconception is that the only solution to this dilemma is to “cash out” any accumulated value or drop the policy altogether. This is not the solution. Having no life insurance coverage at all will leave your family with the problem of covering your final expenses and funeral costs. You will also lose the chance to leave a legacy for your loved ones.
Instead of jumping straight to cancellation, consider the following solutions.
Adjusting Your Lifestyle
It’s true: your lifestyle absolutely affects your life insurance premiums. If you:
- Drink heavily
- Smoke
- Are overweight
- Frequently engage in high-risk activities
- Have gotten into multiple car accidents
You could be the cause of your higher premiums. But while you cannot change your age or your family medical history, you can work on improving your lifestyle. Quitting or cutting down on harmful habits, maintaining a healthy weight, and cleaning up your driving record can all reduce your premiums. As a bonus, these changes will also help you to live a longer and more satisfactory life.
Changing Your Coverage
Rather than canceling your policy outright, one solution is to replace your current policy with a less expensive option. Depending on your age, health, and lifestyle it may not be easy to find a significantly less expensive form of coverage, but not all life insurance policies are the same and you may be able to reduce your costs without compromising your protection.
You might consider switching to a term life insurance policy. Depending on the term covered by the policy, this could be a cheaper coverage option for you. Keep in mind that term insurance does not cover you for your entire life, just for the specified term. Also, term life insurance policies are not automatically cheaper than whole life insurance policies.
Another option is to adjust your policy’s face amount. If you lower your death benefit, you could get lower premiums in exchange. Talk to an agent and see whether this is an option for you.
Make sure you talk to an agent before making changes to your life insurance policy.
Paying with Alternative Methods
If you find at any time that your finances have changed and you need another way to keep your policy in force, you may want to consider:
- Paying with cash value. Whole life insurance policies build up cash value, and if you’ve built up enough you could use that cash value to pay your premiums. It will allow you to maintain coverage.
- Paying with dividends. If your whole life policy pays dividends, you can choose to direct these towards paying your premium costs.
If you ever find yourself in a situation where you believe that you can no longer afford your life insurance coverage, talk to your life insurance agent first. They would be happy to help you work out a solution that will better suit your finances and allow you to still be covered.
About National Catholic Society of Foresters
At National Catholic Society of Foresters, we pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. Sales from our financial services products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs. Our portfolio is extensive, ranging from various life insurance policies to IRA’s to support your financial needs no matter what stage of life you’re in. For more information, contact our friendly experts today at (855) 804-7424.