In times of financial difficulties, people often tend to give low importance to life insurance and let the policy lapse to save some money. But compromising on long term financial security is not wise. Rather than letting your life insurance lapse, you can look at some simple solutions to save money on your policy without losing coverage.
Look for Cheap Options
If you bought the life insurance policy a long time ago, it may be time that you shopped around again to check for better offers. As the new actuarial charts that the insurance companies are now using show increased life spans, the insurance premium for an insurance policy taken after 1990s is much lower than a policy taken before that. So for all you know, it may just makes sense to cancel your old policy and buy a new one at a lower rate. To find out whether you can benefit from a cheaper policy, you should shop around and see if this is possible in your case.
However, if you have developed some medical problem, it is better to continue with the old policy, as premium on your new policy may even turn out to be higher than the previous one.
Keep Coverage Amount Low
If you want to save money and still want to have some financial security, take a smaller life insurance. The amount of your insurance should be sufficient to be of reasonable help to your dependants in case of your death. But bringing down the coverage of your policy has a drawback. It is possible that if your financial condition improves later, and you want to increase the coverage, you will not be able to do so under the same policy. In such a case, you can later add a smaller new policy to your portfolio.
Cash vs Term Insurance
If you are considering canceling your current policy, you can look for cheaper options in the market. For example, term insurance is more affordable than a cash value insurance. Even though the convenience of the latter may be high, but in times of financial difficulty, a term insurance would be better than not having any.
What to Do When You Already Have a Low Premium Insurance
If you already have a low premium insurance and still cannot afford it, then you can ask the insurance company to stagger your payments and give you a monthly or quarterly payment plan so that you can break your premium into easy and affordable installments.