Life insurance costs less than you think, especially when you compare it to the cost of living

“Life insurance is an expensive luxury.” That’s the opinion of 66 percent of Americans polled by LIMRA, a life insurance research organization. The truth is, however, that it’s very affordable—and the younger you are, the more affordable it is.

For example, a 30-year-old male would generally pay about $13 a month for $250,000 in insurance coverage, or about $30 a month for half a million dollars of financial protection for his loved ones if he should unexpectedly die. About 44 percent of millennials think life insurance costs more than five times the actual monthly premium price.

Here are some other ways to put the cost of life insurance into perspective:

Underestimating the importance of life insurance

No matter what age you are, the misconception that life insurance is too expensive can put your family at great risk. Recent research shows that 35 percent of households in America would start to experience financial difficulty within just one month if the primary wage earner were to die. Nevertheless, 63 percent of those surveyed said life insurance was too expensive, the top reason listed for not having this coverage.

Making the right comparison

If you do have the wrong idea of how much life insurance costs—for example, you think it’s five times more expensive than it actually is—it’s easy to see why you might not have much interest in looking into this form of financial protection. Based on this misperception, the actual $30 monthly premium for half a million dollars would come in around $150. That would be a substantial sum.

But if you didn’t know it before, now you know: a half-million-dollar insurance policy can cost as little as a dollar a day.

Now, let’s take a look at the cost of living. If you live in New York City, for example, you reside in the 10th most expensive city out of 451 cities around the world. Your monthly expenses as a single person are about $1,245 before you add the cost of the rent. If you are a family of four, your monthly costs are about $4,571 before adding rent.

The average cup of coffee in New York will set you back $3.12. If you grabbed one on the way to work each morning, you’d end up paying at least $62.40 each month—before adding a tip for the barista. For that same amount of money, you could purchase in the range of $1 million in life insurance coverage.

Doing some quick math, that coverage would protect your family of four by covering the average New York cost of living—though remember, that’s before adding rent—for more than 18 years.

Calculating the risk of not having life insurance

Having life insurance as financial protection for your family is not an expensive proposition you might think it is when you understand how affordable a policy really is. The loved ones you leave behind if something happens to you are responsible for paying your debt. And as Money magazine notes, America as a country has a love affair with debt.

While the peak years of debt coincide with our peak earning years, the statistics are still alarming. The Federal Reserve keeps track with its Survey of Consumer Finances, reporting that those of us between the ages of 45 to 54 carry the highest levels of debt, totaling over $134,000.

But even those who are younger are exposing their loved ones to huge financial responsibilities if something were to happen to them. Those between the ages of 35 to 44 carry only about $1,000 less in debt than the next age bracket. Even Americans under the age of 35 carry an average debt load of $67,000.

In all cases, a life insurance policy averaging less than $15 a month would provide the financial protection to pay off these debts. If you live in New York, your first monthly insurance premium would be less expensive than:

A single meal at an inexpensive restaurant

A single movie ticket

It’s true that you shouldn’t buy life insurance if you don’t need it. In most cases, though, the only reason you wouldn’t need life insurance is if you are young and have no debt. Keep in mind that even if you are single, financial obligations like student loans or a loan co-signed by your parents will become their responsibility to pay off if something happens to you.

We can help you determine how much life insurance you need to protect your family.

Contact us.