Three reasons to consider keeping spouse life insurance in a bad economy
In a bad economy, there are many ways to cut costs to weather the financial storm. As a financial professional, you’ve probably sharpened your pencils and given your own personal budget the once-over to see where costs can be cut and expenses lowered. But if you’ve considered dropping your spouse life insurance, here are three reasons why that short-term financial decision may not be worth it in the long run.
- “My spouse doesn’t earn an income.” – Even if you have a stay-at-home spouse, you still should have life insurance protection for your loved one. Although there might not be an income to protect, if your spouse died, you may have to pay for all of the jobs – like laundry, child-care, housekeeping and home repair – that you currently receive for free. Adding hundreds of dollars in expenses to your monthly budget in a rough economy could deplete your savings and affect your lifestyle quickly. The monthly cost of your spouse’s life insurance, when compared to the cost of paying for those jobs, may be more affordable.
- “We don’t own a home.” – It’s true that a life insurance benefit may help pay the mortgage, but you may still need the money life insurance provides, even if you don’t own a home. Your spouse’s life insurance benefit may help you pay for funeral arrangements, outstanding credit card or student loan debt, as well as living expenses, such as rent, utility bills and car payments if your spouse died. And if your living arrangement has to change after the death of your spouse, the life insurance benefit you receive can help you pay for costly moving expenses.
- “Our kids are grown and out of the house.” – While the financial implications of the death of a spouse may seem more acute to a younger couple with small children at home, the fallout can be just as serious for an older couple who have no dependents living with them. The death of your spouse may set your planned retirement back years – possibly denying you any chance you may have of leaving the workforce entirely. If your spouse died without adequate life insurance, you may have to sell your home or drastically alter your lifestyle to make ends meet. In a tough economy such as this one, a life insurance benefit may help you avoid being forced out of your home, allowing you to remain in familiar surroundings after your loved one’s death.
Would your desire to cut costs now hamstring you from living the life you’ve planned? Make sure you consider the long-term effects of dropping your spouse’s life insurance before you make any drastic changes.
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