Life Insurance May Make Better Budget Sense Than You Think

Insurance is one of those necessary evils that people feel they must have, but resent paying for – especially during tough economic times. The law demands we have automotive insurance and most mortgages require a homeowner’s policy. With the current recession, the coverage that tends to get the ax first in the cost-cutting process is health insurance. All too often that happens against your will if your health benefits are tied to your job and you get laid off.

Given all these factors, most people don’t even consider life insurance an option. That may be a mistake. There are a number of good reasons to have a life insurance policy in tough economic times, regardless of how young and healthy you may be.

  • Young people are exactly the ones who should be taking out life insurance policies. You’ll get lower premiums, which you may be able to lock in until age 65. That means a significant long-term savings. Additionally, you’ll easily qualify if you are young, healthy, and have no pre-existing medical conditions.
  • No one likes to think about it, but even the young can die. If a life insurance policy is in place, the benefit will help your heirs take care of your debts that might otherwise leave them struggling financially, or it could simply help to defray the exorbitant cost of burial in the United States.
  • Life insurance policies also give the insured peace of mind that their major goals will be addressed in the event of their untimely death. With adequate benefits in place, the insured individual can be confident their children will be educated or their spouse will be financially secure.
  • An affordable life insurance policy can also offer peace of mind to those who do not have health coverage. In the event of a catastrophic medical incident that results in death, you won’t be leaving your loved ones with the mountain of medical debt that inevitably piles up for the uninsured in the American health care system.
  • Life-insurance policies can also be forward looking. Many newer policies are drawn up in such a way that later in life they can be converted to deliver long-term care benefits in the event that you become disabled in old age. This not only will spare your loved ones the cost of your care, but it will also give you greater control over your own destiny for the entirety of your life.

As with all insurance coverage, the most important thing is to do your research and to understand all the terms of any policy before signing on the dotted line. Remember that if you have multiple policies with one carrier, you generally get discounts on your premiums. Consider consolidating your homeowners, auto, and life insurance policies to maximize your coverage while minimizing your costs. Above all, don’t fall into the trap of thinking you’re too young to need life insurance. Now is the time to lock in the coverage and to make sure your loved ones are protected should the unthinkable occur.

This is a post by Chris Wilson who is an insurance editor. He writes about various insurance topics.

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7 Responses to “Life Insurance May Make Better Budget Sense Than You Think”

  1. Farhan Thawar |  Apr 26, 2009 at 10:33 am

    I couldn’t disagree more. Young people should not be buying insurance since they do not have dependents that need the money.

  2. Patty D |  Apr 26, 2009 at 4:19 pm

    I agree with the previous poster. The people that need the most life insurance are people that are supporting the family. If people are depenant on you then yes get lots of life ins. Whether it be the husband or wife that has a the job that supports the family. And never never get whole life insurance. If you get old and end up in a nursing home, that is considered cash and you will have to cash it in anyways to pay the nursing home. I have changed my thoughts on things so much lately, things like its not always a great idea to keep all your money in the bank or invested. Keep it in a safe and no one can touch it, you cant lose it to market crashes. The state cant take it if you end up in a nursing home. Whether thats right or wrong it sucks to work your entire life to lose everything to a nursing home.

  3. Jerry |  Apr 28, 2009 at 9:44 am

    Well, life insurance for the really young doesn’t make any sense to me. There are some that promote it but it just doesn’t seem sensible. I think for a parent to take on out on a child could lead to some paranoia. I don’t know…

  4. Find a financial planner or advisor |  Apr 29, 2009 at 11:19 am

    Actually, cash value (permanent) life insurance has outperformed stocks for the past 10 years and many policies have outperformed the market over the past 20 years.

    So the argument that it is unnecessary or expensive just don’t match the facts. It is actually when you are young (and still insurable) that you want to buy insurance to protect your future dependents. My wife had melanoma before age 30. My friend had a heart bypass before 40. If you have a potential insurance need, why not earn a competitive return on it also?

    The following article describes how to choose an insurance rep:

  5. Life Insurer |  May 04, 2009 at 11:44 am

    Many people only have life insurance through their employers, so when they leave their jobs, they no longer have coverage. Term life insurance is fairly priced, so people leaving their jobs (and life insurance) should look into an inexpensive term policy.

  6. Denise |  Oct 28, 2009 at 6:59 am

    The knee-jerk reaction to these trying financial times is to get rid of the unnecessary expenses in your life. But be warned that life insurance is definitely not one of these avoidable expenses. What you write about is absolutely true – life insurance is the best protection for your family in the case of your untimely death. But, I also cannot repeat enough that everyone benefits from life insurance. The belief that only families need insurance is no more applicable. Even if you are single, you will benefit from a life insurance policy to plan for your funeral expenses, clearing of your debts or even looking after any other dependents such as siblings and aging parents. I would urge everyone to go ahead and visit the various online service providers to get a quote at the earliest.

    Denise at AccuQuote
    Disclaimer: I work for AccuQuote and this is my personal opinion.

  7. Life Insurance Atlanta |  Jan 03, 2011 at 3:32 am

    Life insurance for the young and healthy may not make sense now, but if you think about how being older and having a preexisting condition are factors that will cause you to pay higher premiums, or be denied coverage altogether, then you’ll understand that it does make a lot of sense.