Life Is a Balancing Act: Balancing Needs Versus Budget

If you’ve ever struggled to distinguish between wants and needs, you are not alone. Sometimes we want something so intensely it feels like a need. Similarly, we may actually need something that we have dismissed as a want. For example, we may think that taking some time off work is a frivolous want and not something we should dedicate too much of our headspace to. In reality, we may be barreling towards burnout if we don’t give ourselves a break. 

It isn’t always easy to tell the difference between a need and a want or to identify the value in satisfying our needs and wants. However, understanding our needs and wants better can help us to improve our financial health and well-being. 

Anyone considering life insurance will face two challenges, how much do they need and how do they fit this want within their budget. 

​Challenge #1: Balancing life insurance coverage with changing needs 

Each stage of life has different needs to protect, as the illustration below shows, but how does one protect today’s needs and prepare for tomorrows? 

​Challenge #2: Balancing life insurance needs with your budget 

Life insurance is generally more affordable than most people realize. But trying to buy a life policy that will cover all the needs for an entire life would probably exceed current budget available today. How does one address those needs in a cost-effective and budget-friendly way? 

A balanced solution that uses both temporary and permanent insurance

Rather than make one policy do everything, combining two different types of policy may be a more effective and cost-efficient solution.  

• Temporary, or term, insurance provides affordable coverage for a set period of time. 
• Permanent insurance provides coverage for long-term or lifelong needs. Additional features can help provide greater flexibility in how you can use it. 

The benefit of balancing temporary and permanent insurance

Using both types of policy can address challenges concerning coverage and budget: 

• You have greater protection only while you need it. 
• You’re not paying for what you don’t need. 

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Permanent insurance can provide a base of protection, while term insurance acts as a supplement during times of greater need. A balanced solution addresses immediate and future needs without delaying the purchase of permanent insurance. 

Advantages of a balanced approach:

• Combining term and permanent policies is less expensive: Blending term and permanent coverage is generally less expensive than buying a permanent policy alone for the same amount of coverage, or buying a new term policy later in life. 
• Reducing costs: Both types of insurance are usually less expensive the younger, and healthier a person is when they purchase them. Buying one policy first, and then another later, generally, means one will pay more for the second than if they’d bought both at the same time because waiting until one is older will increase the costs. 
• Locking in coverage: Insurability is “locked in” with the permanent coverage. If health declines, valuable life insurance protection remains in place at a time when the cost of a new policy may be prohibitive or they could be unable to qualify for a new policy at all.. 
• Ease of conversion: If one needs more permanent insurance at a later time, they might be able to convert part or all of your term coverage to permanent, without another medical exam. 
• Supplemental income: Some permanent policies, in addition to the death benefit, potentially accumulate cash value, which can be used to supplement income, and in most cases on income tax free basis.  

Work with The Ohlson Group and Levon Justice to find the right type and amount of life insurance for your client's needs. Together, we can find the right balance for your client's life insurance needs.

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Until Next Time – Good Selling!

Levon Justice
Life Insurance Director
Ohlson Group
1-877-844-0900