Can't Afford Your Life Insurance Premiums? 3 Options to Look At

Consider these before dropping your coverage. 

If you have people in your life who depend on you financially, then it's important to have life insurance. But what if you're having trouble working those premium payments into your budget?

These days, living costs are rising across the board. And even if your premium is the same one you've always paid, you may be reaching the point where you can no longer afford it. If that's the case, you have options. Here are three worth looking at.

1. Switch from whole life to term life

The type of life insurance you have could spell the difference between higher monthly premiums and lower ones. If you currently have a whole life policy you're struggling to afford, you may want to swap it for term life instead.

The benefit of whole life insurance is getting coverage for the rest of your life. And, your insurance policy can accumulate a cash value that you can tap or borrow against (doing so reduces the death benefit on your policy, but it's an option). 

But the downside of whole life insurance is it can be prohibitively expensive, costing far more than term life. Term life insurance only covers you for a preset period of life, and it doesn't accrue a cash value like whole life insurance does. But it's far less costly, which means you may have an easier time paying for it. And you're better off having term life coverage than keeping a whole life policy that eventually lapses because you can't manage its cost.

2. Slash your death benefit

You may want to leave your loved ones with a generous death benefit. But if that higher benefit is costing you too much, you may want to consider getting less coverage. 

Say you have a policy with a $1.5 million death benefit. That's a nice gift to give to your loved ones, but if it's not in your budget, then you may want to downgrade to a $1 million death benefit instead, or an even smaller amount.

3. Rethink the length of your policy

Maybe you have a 30-year term life insurance in place. But if you come to realize you don't need coverage for that long, shrinking your coverage window could result in lower costs.

Imagine you got a 30-year term life policy in your 30s, and your primary goal was to protect your children. Well, chances are, your children will be able to earn a living in their 20s, in which case a 20-year term life policy might suit your needs just fine. 

Don't just dump your life insurance

If your life insurance has been getting harder to pay for due to rising bills or other circumstances, you may be tempted to drop it. But before you do, remember the reason you put that coverage in place -- to protect the people you care about. 

As such, it pays to do whatever you can to avoid having to go without life insurance. You may need to rethink your coverage level or the type of life insurance you have, but again, it's better to have some amount of life insurance than none at all.