Should You Cancel Your Life Insurance Coverage?

In today’s tough economy, people are always seeking ways to cut costs. In many instances, people are doing away with expenses that they feel are not necessary – and unfortunately, life insurance coverage often falls into that category.

While doing away with your policy may help to free up more funds over the short term, you may want to give it more consideration before you actually cancel your life insurance plan, as the overall consequences could end up having devastating effects overall. In fact, there are many financial planners who feel that when times are tough financially, families may actually be in need of even more life insurance coverage.

Having final expense life insurance can solve a lot of the problems. No burial fees paid out of pocket and no debts piling up. 

Think Twice Before Canceling Your Policy

Although you may not be happy about being saddled with the added expense, the premium that you pay for life insurance coverage could essentially end up being a very small price to pay if your loved ones end up needing the policy’s proceeds. Doing just a quick financial check could even give you an indication of whether or not your family would be in a worse financial situation if the unthinkable were to happen to you.

As an example, if you were to lose your job today, would your family still be able to afford the same house, the same car, and the same activities that they currently do without struggling financially?

If the answer is no,  you need some coverage to replace the income that your loved ones would lose without you.

Throughout our lives, we accumulate more debt than we may realize. Mortgages, auto loans, credit card balances – it all adds up. Just how much burden would be passed along to those whom you love? Even worse, how would they be able to pay these debts without the support of your income?

Even those who don’t have someone depending on their income should consider keeping life insurance in force. A funeral can be upwards of $10,000. This, coupled with any final medical-related expenses, could leave loved ones in a financial bind without the monetary cushion that life insurance can provide.

Likewise, life insurance can also be a buffer for large estate taxes. Even those who don’t possess large estates could be liable for hefty taxation upon death. Yet, a properly designed life insurance plan could help to reduce – or even eliminate – these expenses, avoiding the sale of other assets in order to come up with the needed funds.

Alternatives To Cancelling Your Coverage

If your decision to cancel your life insurance coverage is truly financial and you are simply finding it difficult to pay the premium, there may be some alternatives that can allow you to keep your family protected, while at the same time alleviating the stress of the premium payment.

One option could be to use the cash value your policy for paying the premium. Even though doing this may reduce the amount of savings in the plan, it could also keep the amount of death benefit that your loved ones would need intact. (Note that this option may only be used on cash value life insurance policies.)

A second alternative is to keep your policy in force but to reduce the face amount of coverage. Using this option will provide you with less in insurance benefit, but it will also lessen the amount of premium that you are required to pay. This could help to ease up on your expenses.

There are several different categories that you should account for when calculating your life insurance needs. Lower your coverage amount is an excellent way to save money, but not having enough coverage could leave you family with a massive amount of leftover bills.

For those who are younger and in relatively good health, another possibility could be to convert from a permanent policy to term coverage. Doing so could actually provide you with even more death benefit for less premium. But if your health isn’t the best, you can still get the best no exam life insurance that is available to you.

If you go this route, however, be careful that you have your new coverage in place before canceling your current coverage. You don’t want to run the risk of being without any coverage at all should an unfortunate circumstance occur in the interim.

A term insurance policy can save you thousands of dollars every year on your life insurance. In fact, in most cases, a term insurance plan will be around half the price of a whole insurance policy.

Certainly, depending on a group plan through an employer is another viable alternative – but only in the vein that it is a temporary form of coverage that will typically end when your employment terminates. Life insurance through an employer is a great way to get life insurance coverage if you plan on being there until you retire. Just because you have insurance through an employer doesn’t mean that you should cancel your private insurance plan.

Getting Lower Insurance Premiums

If you’re just now buying a life insurance plan, or you’ve been a policyholder for a decade, it’s important that you’re getting the most affordable coverage on the marketing. The most common reason that people cancel their life insurance is because thvey can’t afford to pay the monthly premiums. Before you do that, let’s explore some of the ways that you can get affordable life insurance and save money. Making a few simple lifestyle changes could drastically lower your premiums.

First, quit smoking. It’s one of the most common New Year’s resolutions, but it’s also one of the most frequently broken one. If you’re looking for some extra motivation to kick the bad habit once and for all, just think about the life insurance savings.

The next thing that you should improve your health. Improving your health and having the insurance company retake the medical exam could cut your premiums in half. The best way to do that is by losing weight through.

Both of these tips can take a while. They aren’t quick ways to save money.

If you’re looking for a simple way, call us. We can find a cheaper life insurance plan for you. We can help you find life insurance for high-risk individuals or life insurance with pre-existing conditions at a reasonable rate.

 

About InsuranceScored.com
About InsuranceScored.com

Susan Wright, CLU, ChFC, RHU, REBC, ADPA, CITRMS, CIPA has been in the insurance and financial field for over 27 years. Even with years of experience, she continues to create new resources for others. Everything from books to training material.

Susan received her MBA from St. Louis University and her BA from Michigan State University.

She has worked in several areas but excels in writing material for both finances and insurance. Her goal is to give professionals credibility and assist in streamlining the sales process.

She has written countless articles for a variety of websites.

This entry was posted in Life Insurance. Bookmark the permalink.