This article was sponsored by SelectQuote, but all thoughts and opinions are my own.
When we started working to pay off our consumer debt, we began by going through every single line item in our budget. The goal was to determine which expenses were truly value expenses in our life, and which were merely temporary, feel-good expenses that were hindering our ability to become debt free.
Some of the items that we decided were no longer worth spending our money on (in terms of a greater goal) were:
- cable TV
- magazine subscriptions
- dance lessons for the girls
- eating out at restaurants
- trips to the beauty salon
- weekly dates with the kids to local restaurants
The cost of these things was really adding up, and that was evident by our continuously rising credit card debt. When we finally opened up our eyes to our dwindling net worth, we decided that it was time to discover what we truly valued in life and what we didn’t. The money we were spending on things that weren’t a true value to our lives then were redirected to more important stuff, like paying off debt.
The Not-So-Easy to Decide on Expenses
The cable TV, the salon trips; those were easy to cut out. Relatively, anyway. I found out that I could learn to cut my own hair, highlight my own hair (after I went without highlights for three years), pluck my own eyebrows and manicure my own nails. The money I was saving was well worth the effort and I still looked pretty good as long as you didn’t get too close. 🙂
But there were other expenditures that took a little more thought and discussion as to whether or not we’d keep them. Things like the kids’ self-defense classes. And things like life insurance.
Our life insurance costs $122 a month. That monthly dollar amount added to our debt payoff would speed things up nicely. But was it worth the risk to dump the policies?
What is the Purpose of Life Insurance?
In order to answer that question, we needed to determine what the purpose of the life insurance policies was. Here were some of our answers:
- To make sure we were financially secure should – God forbid 🙂 – something happen to hubby, the primary breadwinner of the family
- To make sure there was money to have Rick stay home with the kids should – God forbid 🙂 – something happen to me, the primary caretaker of the family
There are other variables to think about too when considering if you should have life insurance for your family. The truth is that your responsibility to your family doesn’t end if your life ends. They still need to be fed, housed and clothed.
In our case we realized that if we didn’t have those policies and something happened, things would NOT be good financially. We’ve got a minimal amount of cash in savings and are still working to pay off consumer and mortgage debt.
Is it worth it to risk leaving your family in dire financial straits for the benefit of $122 a month? It wasn’t to us, so we kept the policies.
Have You Taken the Time to Think About the Value of a Life Insurance Policy?
Just like you need auto insurance, homeowners insurance and health insurance, most all people would benefit from life insurance too. Knowing that your family would be taken care of in the event of an untimely death will give you a peace and a freedom from worrying about the what-ifs in life.
Term Life Insurance Vs. Whole Life Insurance
There are two main types of life insurance: term life insurance and whole life insurance. Whole life insurance policies remain in place for your entire life, or until age 95. Term life insurance policies generally have a limited term, the most popular being twenty years.
Some companies tout whole life insurance policies as the best route because although they cost more each month, the whole life policies do gain cash value as the years wear on. The problem lies in the fact that the cash value is ridiculously low compared to what you could earn via traditional investing.
My personal opinion is that a term policy is best, the goal being that you’ll use that twenty years to get your financial sh*t together to the point where you become self-insured. Being self-insured simply means you’ve got enough in non-primary home assets to support your family in the event of the untimely death of the primary income earner.
But there are many different companies out there that offer life insurance; who do you pick? Where do you start to wade through the long list of insurance company names in order to find the best deal on the best insurance policy for you and your family?
Personally, I think it’s a smart idea to go through an insurance broker such as Select Quote. By the way, they can also give you quotes for auto, home and senior care insurance as well.
By using a broker you make one call and the broker does the work of getting quotes from a number of different companies so you can easily and quickly figure out which life insurance company is the best choice for you. You’ll want a policy that covers all of your needs and makes smart use of your money at the same time.
*P.S. By the way, when we were going through all of our expenses line by line, one of the things we did do was get quotes from different auto and home insurance companies to see if we could get a better rate for the same coverage. In doing so we saved nearly $500 a year by switching to a different company. This is the value that can be had by calling a broker.
Doing What’s Best for You
When you’re working on a journey to eliminate debt or build wealth, only you can decide which monthly expenditures are needs and which are wants. For many budget line items, the answer is obvious.
For us, keeping a quality life insurance policy was and is definitely a need. Eventually, the day will come when our wealth assets will be large enough that we’ll technically be self insured. But until that day comes, we’ll happily pay the premiums on our life insurance policies. The security of our family is worth it.
Do you consider life insurance a want or a need? What other items in your budget have you kept because they were important to the well-being of your family?