It’s no secret that many Americans have fallen on tough times. As household incomes remain stagnant at best, many families are looking for every way possible to reduce their monthly expenditures and make ends meet. One of the ways many people are finding to free up more cash is to stop making payments on their life insurance premiums.
Keep Your Insurance Even in Tough Times
In tough times, it’s important to lower all your expenses. Budget groceries, eliminate unnecessary expenses, and try to qualify for low income housing. Whatever you do, however, don’t skip your life insurance payments.
One way to eliminate your monthly premium is to use the cash value of your whole life policy to pay the premiums for you. This operates as a loan of sorts as you borrow money from yourself to meet your obligations. Many companies can set your policy up to extract the payments automatically.
Because it is a loan, you will be responsible for interest as well as principle payments later on, and there are restrictions as to how much and for how long your policy’s cash value may be used. Using the automatic premium loan feature can be a pain-free, temporary solution to keep you insured until your income picks up.
Another way to limit your monthly financial liability is to reduce your benefits. Families can save significantly by lowering the potential payout from death benefits. This should only be done after careful consideration, however, because reducing the benefit means less money will be coming in the event the main bread winner suffers a catastrophic injury or death.
Change Insurance
Perhaps the best way to lower monthly premium costs is to make the switch from a permanent life insurance policy to a term life policy. Term policies cost significantly less than permanent policies, meaning that under some circumstances you may be able to increase your life insurance benefits while at the same time reducing your monthly costs.
Term policies are typically available for terms of 10 and 20 years and offer an affordable way to lock in your insurance rates at a reasonable monthly premium. Because term policies don’t have to take long-term health risks into consideration, 20, 30 and even 40-somethings can expect to purchase robust health insurance policies for as little as 20 to 30 dollars per month, depending on their relative health.
For whole and permanent life insurance policy holders, there can be added financial benefits to making the switch to term, as well. By cashing out on whole life policies, a policy holder may be able to use the extra money toward his monthly term life insurance premium. Because the term life premium will likely be significantly less than the cost of a whole life policy, the cash out may go even further to reduce or even eliminate issuance premium costs. Be aware that, depending on the size of the cash out, there may be tax liabilities associated with closing out a whole life policy. If the only alternative is to cancel the policy altogether, this can be a very effective and beneficial way to maintain coverage and lower costs.
Even in tough economic times, it is important to make sure that you are protected and to have the peace of mind that your loved ones will be well-cared for in the event something happens to you. Don’t risk your family’s future wellbeing by skipping your insurance premium payments when there are plenty of workable solutions to help you keep your coverage while reducing your monthly premium expenses.
LowIncomeApartmentFinder.com helps people on limited budgets locate cheap apartments for rent, make smart financial decisions and manage their financial resources efficiently.
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January 16th, 2012 
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