Life Insurance During A Recession—Is It Really Necessary?
Life may have its ups and downs, but so does the economy. Gas prices, grocery prices and the cost of just about everything seem to be going up lately. As items get pricier, you’ve probably heard talk about the possibility of a recession. But what is that exactly, and how can you justify paying for life insurance at a time like this?
What is a recession exactly?
A recession is defined as a significant decline in economic activity that lasts for months or sometimes even years. Depending on your age, you’ve likely witnessed several of them in your lifetime already. On the flip side, you’ve also been around during periods of economic expansion, which occur when the economy grows for two or more consecutive quarters.
However, as scary as recessions may sound, they’re considered an unavoidable part of the business cycle and, along with expansion, form a regular cadence that occurs in economies all around the world. Our economy expands and contracts on a regular basis due to national and international market performance. We tend to notice it more, however, when the economy takes a downturn and household budgets are seemingly pushed to the limit.
Cutting costs shouldn’t include your life insurance.
If the cost of life insurance seems like a good place to make a cut, think again. A temporary economic downturn is probably not a smart time to discontinue protecting the ones you love. If the unexpected were to happen, would they be able to afford to maintain their current lifestyle without the assistance of your life insurance policy? Would they be able to bear the financial burden of your final arrangements amid increasing costs and fees? These are just a couple of the things to consider as you make budget decisions. Is sacrificing your peace of mind really a smart choice?
Let’s face it—it’s easy to spend $100 or more each month stopping by the drive-thru for coffee or fast food. Maybe you never considered life insurance because you think it comes with a high price tag. Most people believe it will cost 2 to 3 times more than it really does when, in fact, life insurance is actually pretty affordable. According to the 2022 Insurance Barometer Study, 80% of people overestimate the cost of life insurance. Don’t let this common misconception keep you from getting the coverage you need.
You can’t put a price on confidence.
Life insurance is about knowing that your loved ones will be provided for if something happens to you. How does it feel having the confidence that no matter what happens to you, those who mean the most will have financial security? These kinds of considerations are the most important ones to keep in mind. They allow you to sleep peacefully at night, knowing full well that you’ve done everything you can to help ensure the quality of life for those you love.
Not yet covered? Let’s take care of that.
If there’s one thing that the past few years have taught us, it’s to expect the unexpected. With that in mind, now is a perfect time to consider a life insurance purchase if you don’t yet have coverage.
Your life insurance options depend on both your budget and your needs. If you’re only looking to cover your final expenses, your cost would likely be lower because your needs are different than those of someone who needs to make provisions for their spouse’s and children’s futures.
Various insurance carriers offer many different types of life insurance products to choose from, but most life insurance can be defined as either term or permanent.
- Term life insurance protects you for a specific period of time. If you pass away during that time, your spouse or other beneficiary will receive a specified amount of money as a death benefit.
- Permanent life insurance has no specified term since it is designed to cover you for the rest of your life. Though typically more expensive, permanent life insurance has affordable options that not only provide a death benefit but can also provide cash value, unlike term life insurance.
Some final food for thought.
It’s understandable that rising prices can cause concern, but here’s a tip for those looking to maintain a more consistent budget: Check out level-premium insurance. Level-premium is a type of term or permanent life insurance where the premium remains the same over the entire life of the policy. If you want to lock in a rate for the length of your contract, this type of policy is worth your consideration. With this type of coverage, premiums will never go up and are guaranteed to remain the same throughout the length of your contract.