Is Your Coverage Covered?

Life insurance can help protect your income, but first your income needs to support your life insurance. Fortunately, striking this balance is more manageable than you might think.

One of the most common reasons Americans avoid buying some or additional life insurance coverage is because they believe it’s too expensive. However, consumers tend to overestimate the cost of a policy. “The truth is that the cost of life insurance has actually decreased over the past decade,” says Walt Zultowski, Ph.D., principal of WZ Research + Consulting, LLC. If you still find it hard to believe that life insurance is affordable, these steps can help keep your coverage well within your means.

1. Take Stock of Your Essential Costs

About two in three Americans say their mortgage, groceries and electric bill are hindrances to buying life insurance, and nearly one-half say additional utilities like internet, cable and cellphone service deter them from getting covered.¹ Although you shouldn’t sacrifice your standard of living to pay premiums, you should incorporate life insurance into your monthly budget. The value of life insurance becomes obvious when taking this into account: If you were to pass away, this one monthly financial commitment could help your dependents pay these expenses for years. (Can the same be said of your mobile phone plan?)

2. Buy Your Policy at the Right Time

You’re more likely to save on premium costs while you’re young. This is especially true of permanent life insurance, which covers you for your lifetime (as long as premiums are paid) and builds cash value as the policy matures. Yet, age isn’t the only factor around timing. With term life insurance, your policy period of 10, 20 or 30 years should align with whatever timeline you’ve set to meet particular financial needs, such as getting your children through college or paying off a mortgage. The premiums for term life typically remain level for the length of the policy, which means your budget won’t experience any surprises with these payments.

3. In Good Health? Opt for Fully Underwritten Coverage

Life insurance rates take your health into account, so make the most of your health status. For instance, if you’re a nonsmoker and in good health – opt for fully underwritten coverage. The insurer usually will provide a free, noninvasive exam and allow you to choose the place and time. Don’t worry, the process is easy and convenient. In the end, your wallet may thank you.

4. Don’t Set It and Forget It

Over the course of your lifetime, your income will probably fluctuate, your expenses may change and so will the number of loved ones who financially rely on you. Throughout these changes, your life insurance should keep pace, both in cost and coverage. Thus, it is recommended you re-evaluate your monetary needs every two years.² Pivotal milestones such as getting married, having children, buying a home or retiring are also good times to reassess your coverage needs.
 

• Facts from LIMRA Life Insurance Awareness Month, September 2015, LIMRA, 2015.
• Your Helpful Life Insurance Guide: The Basics, Amica Life, 2017.

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