This article are provided for information purposes only, and are not intended as legal advice.

Life insurance – do you stop paying premiums in tough times to preserve cashflow?

February 23rd, 2009

When times were good, you purchased key man life insurance on the owner of the business.  When the market is tough and cash flow of the company is slowing down, should you cancel your insurance?  Remember, depending on the type of insurance purchased and when, it would be more costly to start a new insurance policy, that assumes that your health permits a new policy.  When you started the insurance policy say 10 years ago, say you were 30 years old.  Now, 10 years later you are 40.  The cost for an identical policy would be considerably more expensive now since you are 10 years older. What happens if you cancel the policy and then find out you are not insurable anymore?  Don’t this this is possible.


I knew a person who was in amazing shape, ran the Boston marathon several times, ran 10 miles every day.  He decided to quit his job working for a person on Friday and was suppose to start at his new place on Monday.  On Saturday, he had a stroke.  They found a small hole in his heart which they did not know existed.  In this case, he was between jobs and his insurance expired on Friday and he had no life or medical insurance over the weekend when he got sick.  In this case, his stroke was massive and now he is paralyzed on half his body, has problems speaking and doing basic functions.   This should be a good reminder that you can have an unexpected health problem when you think that it will never happen to you.


If you stop your insurance premiums to preserve cash, will you be able to get the insurance back?  Look at the type of policy that you have and see if you can convert a whole life or universal policy to a term to 100 policy. See if this can save you cash flow but at the same times preserve all the years which you contributed to your insurance policy.



Filed under: Insurance — Gary Landa @ 3:12 pm

No Comments »

No comments yet.

RSS feed for comments on this post. TrackBack URL

Leave a comment

You must be logged in to post a comment.