Young couple, new parents, and all the associated costs of starting out often make us wonder, “how can we make this work?”
After sorting out and agreeing on the priorities, protection to mitigate an untimely death will (or should be) on the list. The loss of an income could have devastating consequences that can impact a person/family for a lifetime!
The good news? It can potentially be avoided.
From a budget perspective, inexpensive can be key. One possible solution may be term life insurance to get started. Premiums are typically level, all the variables are set – length, protection and most importantly, cost! When the picture is clearer, and budget permits, one can consider converting all, or some, of the coverage to permanent life to provide a longer protection period.
As time moves on and the realization is there is less saving for school or retirement, what can we do now without breaking the bank?
If the conversion of the earlier term policy had been to a Whole Life or one of the Universal Life solutions, there is the potential for cash accumulation. Again, decisions driven by budget will have an impact on this solution, but if overfunding these products is possible a tidy sum could be achieved.
Now, resources are available that can be used for future obligations. One may borrow from their contract/policy, addresses the current challenge, and then repay the “loan” (with interest) so that the “kitty” is replenished and ready for the next event.
Our couple can now sit back and realize that the simple, inexpensive solution they started with provided them with income/lifestyle protection and has grown to address longer term challenges! Thank goodness for term life insurance!
A second possible solution could be developed using a permanent product. Once the need has been established, a whole life policy with a low face value could be introduced, with a large Term rider. Benefits would be provided for a reasonable premium, giving clients a permanent base and an opportunity to convert parts of that term rider over as time moves on.
No new underwriting, no second check to write and the same company still providing the necessary protection.
The answer to the question of how can I do everything on a limited budget has been addressed, at least for the protection part of the conversation!