When Life Insurance Becomes a Hindrance

Posted in Life Insurance

May 12th, 2009

Life insurance is supposed to make everyone’s life easier, but this doesn’t always happen if it becomes increasingly difficult to maintain. Unfortunately, this is the case with numerous policy owners who are having a more challenging time than ever paying for their coverage.

So what is causing life insurance to become a hindrance to policy owners? There are a number of reasons. Let’s look at a few:

• Decreased Income – If you find that your income has decreased and you know you won’t be able to put as much away, you will suddenly need a bigger life insurance policy to protect your family.
• Insurance Company Expectations – While you may be able to hold up your end of the bargain in payments, you can’t help but wonder whether the insurance company will be able to make necessary payments when the time comes.
• Variable Policies- These policies combine insurance protection with a tax-deferred investment account to help pay for premiums. During difficult economic times, when investments don’t bring in substantial returns, policy owners find that their premiums go up.

The Life Insurance Stress Test

If you find that your life insurance policy is becoming more of a problem than a help to you and your family – especially if you own a variable policy -it may be time to take the stress test. This test involves you asking your insurer to project your future premiums after assuming the investments can earn a 4% return. If you can’t afford the premium under these conditions, you may need to consider other options.

For example, you might consider a term policy, which is less expensive than a variable because it insures you over a specific period of time and has no investment component.

Unfortunately, a life insurance policy was never meant to become a hindrance. So before giving up on this type of necessary coverage, it’s good to shop around to find the best protection out there for you and your family.

Are you unhappy with your life insurance policy, or are looking for the best life insurance rates available? If so, Go Insurance Rates can help.