PROTECTING YOUR BIGGEST ASSET

Lower raises, cost of living increases, and unexpected layoffs are causing many families to reconsider their life insurance coverage. While canceling your policy may offer short-term relief, the immediate and future expenses that arise from the death of a family’s breadwinner can be devastating. The fact that your investment accounts have been hit hard and the interest on your savings accounts has declined are more reasons to ensure your family’s quality of life will be sustained in the event of your premature death.

Before canceling your policy, try these strategies to reduce your premium.

Switch to Term Insurance

Term insurance provides a set amount of coverage for a specified amount of time, or term. These terms can range from 10 to 30 years with few companies offering longer or shorter terms. With term insurance, you can receive a large amount of coverage for a relatively low premium. The reason for this cost savings is that once the term of your contract is up, you no longer have insurance. This type of coverage works similarly to car insurance in that you pay the issuing company for assuming the risk of your demise. If you do not pass away during the contracted time, you have an option of renewing at a higher premium or switching for another type of insurance.

Review Your Coverage

Your life insurance needs change over time. As you grow older, the financial responsibility you have to those you leave behind generally decreases. Your children grow up to take care of themselves, you pay off your mortgage, and ideally, you would have eliminated all your consumer debt so you would only need enough insurance to take care of your funeral expenses and estate taxes. Another event that may alter your needs is if you purchased an amount of insurance that was large enough to cover your child’s education in the event of a sudden death and your child has since graduated or received a full scholarship. There are dozens of life changes that can spark a change in your insurance needs; before canceling your policy, look to see if you can lower your premium by reducing the coverage first.

Revisit Your Health

Insurance companies calculate risk when deciding what to charge for your coverage. An unhealthy 40-year-old will pay a higher premium than a healthy 40-year-old. Often you may not think about informing the insurance company if you’ve stopped smoking or lost a significant amount of weight. Both events should be discussed with your provider as they may trigger a rate reduction.

Shop Around

Quotes are at our fingertips. Long gone are the days when you have to wait for the insurance man to come knocking on your door to sell you life insurance. You can request a free quote from all the major insurance companies. Before beginning your search, call your current provider to let them know you’re shopping the market for less expensive coverage. This will put them on alert and motivate them to begin to work with you to find a product that fits your needs and budget.

Ask For Help

If there are people whose finances would be greatly impacted if you were to pass away without proper protection, you can request that they pay your premiums until you’re in a position to do so. This is especially true of young adults whose parents would have to foot the bill if something were to happen to their child. When called upon, parents may gladly take over premiums to ensure they are not in a bind if something unexpected were to happen.

Life insurance is an expense many of us don’t get excited about paying every month. It’s not tangible; you can’t see it, and the pressure of your right now, the imagining how it will benefit our loved ones when we’re gone just isn’t enough when measured faced with the pressures of your right now, but I encourage you to take a second and think about it. For some of you, the strategies above will work, for others, the pressures of your right now will have you considering canceling one of the last testimonies to your family that you cared. I encourage you to choose wisely.