The True Cost of Not Buying Life Insurance

Carrie Smith | Life Insurance | 30 Nov, 2014 | No Comments


You probably already know the importance of having life insurance, especially if your spouse or family depends on you for financial support. But what if they have other avenues of income? You may still want to protect them, their future, and yourself, in other ways.

Generally speaking, deciding how much life insurance you need means taking the total income that would be lost upon your death, and deducting it from the sum of your family’s daily financial needs. This also includes things like burial costs, estate taxes, medical bills, and any other expenses incurred while you’re still alive.

For this reason, not buying life insurance right now can have costly side affects for everyone involved. Here’s what I mean:

Leaving Your Family Unprotected

How will your family survive when you’re gone? Does your spouse have enough income to pay the daily expenses like mortgage, utilities and tuition? Or will they have to go back to school to get a degree? Do you income sources in place for them after you’ve passed on?

Leaving your family to fend for themselves is a pricey option compared to the relatively small monthly premiums that life insurance costs. Having a lump sum ready for them in case you’re not around anymore, will protect your family from having to change their lifestyle on top of dealing with financial issues. Losing a loved one is hard enough, don’t make them face financial problems at the same time.

Take out enough coverage to pay for their needs, as well as enabling them to maintain the life they have. Life insurance can cover everything from daily living expenses, to allowing them to upgrade their lifestyle — providing them with opportunities you never had.

Not Having a Legacy

No matter how much you may hope that your extended family, spouse and children get along, you never know how that dynamic will actually work when you’re gone. Having life insurance set up will enable your family to fend for themselves, and not have to depend on any other members for help.

This will allow you to protect the legacy you hope to keep in tact, while paying for your children’s financial futures. All the goals you work towards right now, like paying for college, or helping them buy their first car, will still be able to happen.

The key to thinking about how much life insurance costs is that it will keep the legacy and financial future for your family in tact.

Penalized for Waiting

As you get older, insurance premiums will continue going up. The younger you are, the lower life insurance will cost you, and likewise, the older you get the higher it will be. Why? Because you’re getting closer to the end of your life, and your health will naturally get worse as this happens.

Speaking of, you may be really healthy now but what happens when your health changes as you get older? This is a very likely circumstance, as well as the fact that you could be involved in an accident or other emergency issues that can cause your health to deteriorate.

Don’t wait until your current state of health changes, or your age increases, before you get life insurance coverage. You’ll not only be saving yourself some money, but avoid the stress of not knowing what the future holds.

Paying Higher Taxes

Depending on the income tax bracket you fall into, they may have to pay a large portion in taxes for the income generated by your family.¬†However, beneficiaries of life insurance payouts don’t have to pay taxes on the income they receive from the policy.

So you can help them save a lot of money in taxes by providing enough life insurance for them to survive. Additionally, the funds will help your spouse not have to look for more work, or struggle to survive on a smaller paycheck.

Not Buying Life Insurance Costs Too Much

As you can see, it often costs a lot more NOT to buy life insurance coverage than it does to pay a small premium. You don’t want to leave your family’s well-being, your legacy, or the opportunities in the future, to chance because you aren’t prepared for them.

Buying life insurance outweighs the short-term sacrifices, and makes room for long-term gains.


Carrie Smith (@carefulcents) is a freelance writer and editor who recently quit her full-time accounting job to pursue entrepreneurship and blogging.

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