Should I Still Get Life Insurance During a Recession?
During times of recession, paying for a life insurance policy might not be a top priority for most people. But it is even more important to have a safety net for your loved ones when times are bad.
Having life insurance during a recession may even be more important than having it while being financially stable. Your life insurance death benefit is there to protect your loved ones if you were no longer around to provide income. This income is even more of a necessity during a recession since everyday living expenses are inflated. Your death benefit will be there to help cover these expenses and help pay down any outstanding debt you may have during this time.
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Now, permanent life insurance that accumulates cash value also plays a vital role in retirement during a recession. In a recession, you are experiencing negative volatility in your investments. Withdrawing from these investments while they are down would further compound your loss and in turn, you would deplete your funds at a much faster rate. With cash value, life insurance provides you the opportunity to withdraw income from your life insurance and allows your investments to have the ability to rebound or recoup some of their losses.
With all this information, you may have some questions. So, let’s answer them!
Q: Do life insurance rates go up during a recession?
A: Life insurance rates are not typically impacted during a recession. In fact, some companies have recently updated their premium scales and we have seen costs for term insurance decline in the last couple of months.
Q: Can I withdraw from my existing policy without reducing the coverage?
A: This all depends on the policy you have in place and how long the insurance has been enforced. If you have questions about an existing policy, please let us know!
Q: Will my insurer still be able to pay out death benefits during a recession?
A: Short answer, yes! Your premiums are paying for the insurance that your death claim will be fulfilled. Insurers provide sufficient backup funds to deal with financial obligations regardless of economic downturns. That being said, you want to make sure you are using an insurance company that has credible financial strength.
Recessions usually have a negative connotation about them, and rightfully so. However, there can be many hidden benefits for you when our economy is going through one. Talk with your financial professional today if you have any worries.
Curious about how our economy is doing? Watch our most recent 1 Month in 1 Minute and look out for a recap for September coming next week!
Need any help with your life insurance or have more questions? Don’t hesitate to reach out to me here!