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Insurance may be the best protection for your family during a recession

By Nina Terenzi, Oct. 13, 2022
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Economic uncertainty continues to dog the global economy. The war in Ukraine has worsened an already fragmented supply chain while in the U.S., inflation is at a 40-year high with no clear sign of abating. Recession may be on the horizon—or, depending on who you ask, has already arrived. The simple fact is, most people are tightening their belts.

Reviewing or updating your insurance policies—and particularly your life insurance policy—is more important now than ever. During a recessionary period, it can be hard to justify the cost of additional or higher insurance premiums—especially for young and healthy families—but an affordable life insurance plan will protect loved ones who rely on your income for essential expenses such as housing should the worst happen. Protecting your loved ones against catastrophic loss always brings peace of mind, but never more than today as the cost of living continues to climb.

Below is a general overview of how insurance may protect you and your family during these volatile economic times. The examples are for illustrative purposes and are not intended as advice. For information specific to your policies and coverage, contact your insurance representative.

Life insurance

When you pass away, life insurance can provide your beneficiaries with the financial means to cope during one of life’s most stressful, emotional, and taxing milestones. This is especially important if you are the family’s principal source of income or if the family will struggle when your contribution stops. With the right life insurance policy in place, mortgage or rental payments can continue to be made on the family home and cash may be available to cover food, utilities, and other crucial living expenses, including burial costs.

Life insurance can also pay debts. During a recession when jobs are vulnerable and more and more people rely on credit cards to make ends meet, providing your survivors with a means to pay off debt may create otherwise unattainable financial stability.

Also, life insurance provides predictable payouts regardless of market fluctuations. So, while the value of your retirement portfolio may grow or shrink, a life insurance plan will pay out regardless of what’s happening with the global marketplace.

Types of life insurance

Broadly speaking, there are two central types of life insurance: cash value, (or “permanent”) insurance plans and term insurance plans. A conversation with your insurance representative will help you understand which type of policy will work best to meet your goals now and in the future.

Cash value policies not only pay a death benefit to your survivors but generally have an additional cash value component that may be accessible while you are still alive. These are called “permanent plans” because they stay current from the time the policy is purchased, so long as premiums are made. These plans work well for people seeking a policy that allows them to leave more burial costs for their survivors.

Term life policies provide coverage for specific periods of time, sometimes as little as one year. Term life is often considered the least expensive life insurance option and should be considered by those interested in providing affordable protection for their beneficiaries and who are not seeking additional cash value from the plan. Term life may also be useful for people seeking to cover a particular expense that will continue after they pass away, such as a mortgage or business loan. A simple term policy is generally renewable each year, regardless of your health—though premium rates may rise dramatically if you become ill during the prior term year.

Property Insurance

Material costs have also skyrocketed in this time of limited supply and increased demand. For most of us, that means the cost to repair or replace our property—our homes, cars, and other valuables—is greater than ever, exposing us to considerable financial loss in the event of fire, theft, or other unforeseen events. Now may be the ideal time to make sure your coverage thresholds still make sense given the recessionary climate.

Health Insurance

For retirees or others not covered by employer-sponsored plans, seeking insurance coverage on the Health Exchange Marketplace or through Medicare will help you and your family avoid potentially disastrous consequences if you are presented with a health emergency.

Do a recession-planning review of your policies

Life will always take unexpected turns. While insurance premiums may seem expendable during challenging economic times, having the right life and property plans in place is critical and a relatively inexpensive way to provide financial shelter for your loved ones in worst-case situations. Talk to an Eastern Insurance Group representative to learn more about how insurance can play an important part in your personal recession protection plan. Call 800-333-7234 or complete our quote request form today.

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