Life Insurance in the Recession

By Alfred Hidgings

Most people who have life insurance coverage know the importance of life insurance, it is the reason that they bought it in the first place. Life insurance in its purest form is basically cash benefit redemption upon the death of the insured person. The problem is that over the years the premium payment that you have to do every month or year can be quite tiresome, some even learning to resent them as they drain much needed cash from us every month.

The resentment and emotional distress about the constant premium payments are actually made worst in recessionary times. This is because most realize that money isn't as easy to come by anymore and that they should actually take steps to start reducing their expenditures in the face of possibly losing income or having your income reduced in the future. It is almost always at this stage that families start to look at the different expenses that they have and look at ways at reducing them. More often than not, they would seriously consider dropping their life insurance coverage to save a few bucks.

If you actually step back a moment and think about it, canceling your life insurance coverage to save a measly $20-$40 a month is actually a rather daft thing to do. In terms of economics, you are actually foregoing a huge future benefit just to save a disproportionately small amount now. It is far too easy to forget why you bought the life insurance coverage in the first place. You did not buy it for yourself, you bought it for you family so that they won't have to endure too much financial burden when you pass.

In valuing life insurance, you can't look at it at the individual's standpoint. You have to value it by looking at it from the family's perspective. You have to ask yourself the question, will my family be financially O.K if you're no longer in the picture; Most of the time the answer will be no. If that is the case then you know that your life insurance coverage is of vital importance. You simply can't afford not to have life insurance coverage and leave your family in that situation if you die.

Another problem of how life insurance is judged is in terms of its scale and period. This is especially true when you contrast it against the recession. A life insurance coverage plan is something that you invest in for your life; it is very long term proposition. The recession however is a much shorter term problem. If you decide to drop your life insurance coverage then you are reducing your long term benefit for a short term gain. This is again a very unwise thing to do.

Each family has many other expenses that it can easily do without in exchange for scrapping the life insurance coverage. Some things as easy as lowering the number of channels on your paid TV selection or even exchanging that expensive wine you have at the end of the week for something a bit more reasonable are much more practical alternatives as it has completely no effect on your future.

You probably already know that life insurance coverage is very important. You know that you do it for your family and not yourself. This fact can however be lost in all the noise about the current recession and how all of us have to cut back. Life insurance coverage should almost never be dropped unless you really have no other expense items that you can save on. The benefits that you are foregoing are almost always too big. - 23211

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