There has been a growing chatter in the media and among prominent business leaders about a recession in 2023.
With this new year upon us, and worries about hard financial times ahead, many people may be looking at how to prepare for a recession, including discretionary expenses that they can cut back on. While there are certain expenses you can’t eliminate (food, housing, utilities), during a recession, there are also some expenses that may not seem to be essential, but should still be considered such and should not be eliminated or passed over.
Never Cut Back on Life Insurance Because of a Recession
During a recession, you may be tempted to cut back on or completely forgo spending money on life insurance. However, if you have any dependents, this could end up being your worst financial decision. When you cancel a life insurance policy due to a recession (or other external economic conditions), you sacrifice your family’s long-term financial security to save a few dollars in the short-term. Too often, this is a tragic trade-off.
Of course, statistically-speaking, you will still live through a recession and so you might use that as justification to save some money on something you feel you will not need at the time. However, what you may not realize is that, while you will likely not die during that time, by canceling your life insurance policy, or waiting to purchase a policy, your cost of insurance will likely be much higher when you do get a new policy, losing all the money you may have saved in the meantime. This is most often the case for two reasons:
- Life insurance rates go up the older you get.
- As you get older, you are more likely to develop adverse health conditions. With even slight negative changes in your health your cost can go up, and some health conditions can make life insurance extremely expensive or no longer even an option.
Life Insurance Can Be the Ultimate Source of Emergency Income
In short, although it is not often thought of as an essential expense like a mortgage or rent payment, or food and utilities, life insurance could ultimately be the source of funds used to pay for these things and every other necessary expense for your family during the worst kind of emergency (following an unexpected death) that could have a significantly bigger negative effect on them than a recession. As such, life insurance is one expense that should not be cut back on during a recession.
Don’t Delay the Purchase of Life Insurance
If you aren’t sure about when to purchase life insurance or how much life insurance is the right amount for you, contact us to learn more. You can also learn more about different types of life insurance and apply online right here on our website.