According to recent articles as reported on the Huffington Post, the average Canadian debt is sitting at close to $30,000 (excluding mortgage debt). Servicing this plus a mortgage and all the other expenses can be quite a challenge for many Canadians, and it is getting harder for many as costs, such as gasoline, continue to rise.
Here are three ways to keep paying your life insurance premiums when money gets tight:
1. Reduce Either Your Monthly Debt Payments or Life Insurance Premiums
Looking at the first option, perhaps combining all your debts into one line of credit (e.g., Manulife) would reduce your monthly payments. The danger with a line of credit like this is that you need the discipline to make the monthly payments, as there is no penalty for not making the payments as long as you have not reached the credit limit. If you have the discipline, many people have significantly cut their monthly debt payment with this kind of product, and we can help you figure out if it would make sense for you.
2. Review Your Insurance Needs to Assess If They Have Changed
The second solution is to review your life, disability, and critical illness insurance needs to see if they have changed since you purchased your policy. With an aging family and a declining mortgage debt it is possible that you do not need as much coverage as you are paying for. In addition, the cost of term insurance has been dropping, so it might be possible to purchase a new policy that covers your current needs for less money. If you still have the need for the insurance you have, or possibly more insurance, do not sacrifice your family’s long-term financial stability for a short-term solution – go to the last option.
3. Reduce Your Expenses
The final option is to reduce your expenses altogether. Most people can find a savings of at least 10% of their monthly expenses if they take control of their spending. Start by making a list of what you spend using an expense budget sheet. You will likely discover that you cannot explain where all the money goes, which suggests there is room for savings.
Keep track of all the money you spend for two weeks and you will find money you can save without affecting anything important. Perhaps it is the $3 or $4 coffee or lunch out every day. Multiply these by the number of times a week you do it and then by 52 and see what can be saved, not only for paying the debt charges but also for reducing the amount of debt you are carrying. *Do it NOW before interest rates start to climb again*
The takeaway is that you can balance your life insurance premiums with your debt payments. It is important for your family that you take the time to do it now before the debt payments increase further.
