Life is full of uncertainties and you can run into financial complications that can make paying your premiums difficult. Your future budget may not be able to support the premium payments you once felt comfortable with when you first purchased your plan.
Situations like the loss of a job or living on a fixed income make managing your premium payments incredibly taxing. The pressures associated with struggling to make your plan’s payments lead many to simply give up and surrender the policy. But don’t jump to that conclusion immediately, there are alternatives you need to look into first.
This week, we’ve gathered a number of approaches you can take to make your plan more affordable and manageable. Before you decide to drop your plan because the pressure is too immense, try out some of the below tips and keep your coverage.
Do You Really Need That Face Amount?
Start your insurance saving mission here and simply reduce your policy’s face amount. Reach out to your insurance provider and ask to meet with them to discuss reducing your plan’s face value. In exchange for a lower premium payment, you can cut back on your policy’s value. If you bought a little too much coverage for your current needs and budget, it can be beneficial to simply reduce it.
Cutting down on unnecessary coverage amounts is just the start; follow this up by dropping policy riders and any other add-ons that may be driving up your premiums. In a time when you may be facing unemployment stress or living with a reduced income, keeping your basic coverage plan is more important than having that high face value and additional add-ons.
Monthly? Or Annual Payments?
If you’re paying for your insurance plan annually, you could benefit from switching your payment method. Plan ahead and switch your policy to a monthly payment format to help you budget your finances more efficiently.
With a monthly payment structure, your premiums can be deducted automatically allowing you to know what is coming out of your account and when. With a majority of plans offering a fixed rate amount, you won’t need to worry about your premium amount changing, which in turn makes budgeting easier on you.
Annual payments can be effective as well, but you run the risk of the payment coming out during an inopportune time. Since your payment comes once a year, it can come at a time when you’re facing unexpected expenses or when you’ve been away for some time. By switching from annual to monthly payments, you can know when your payment is coming out and work that into your budgeting plans.
Use Your Riders
It’s fairly common for people to struggle with insurance payments after a work-related injury that prevents them from earning income. Your plan may have a rider that is useful in just this situation. The waiver of premium rider helps to keep your coverage in place while allowing you to stop making premium payments. The only potential drawback to this solution is your injury needs to fall into the covered categories your carrier outlines.
A disability income rider is also quite useful here as it will cover your income if you become totally disabled. During a time when your income is in jeopardy and making payments seem impossible, utilize any useful riders and save your life insurance from lapsing.
Strapped for Cash? Use Your Cash Value
Having a permanent life insurance plan has a lot of perks, one of the biggest being cash value. By making more than the minimum premium payment for a long period of time, you can build up significant cash value. When facing times of financial strain, you can tap into this benefit and use it to make your premium payments.
This strategy gives you a break from your premiums and allows you manage your finances while still keeping your plan in place. Depending on how long you’ve had the plan you could offset your premiums for months or years.
Don’t Give Up On Your Policy Yet
There are many unknowns in life and the possibility of being unable to cover your insurance costs is one of them. But simply assuming that the best plan of action to take is to let your policy lapse or surrender it isn’t wise. If you want to keep your policy going during a temporary rough financial time, try using one or more of these strategies.
We at LIFC work with over 20 different Canadian providers who can help you with any insurance need. We will offer you help with keeping your policy in force in any situation. After all, it’s only to your benefit to keep your plan in place; buying a new policy later in life only means more expensive premiums for you.