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The truth is that most of us, if someone else was paying the bill, would carry more life insurance than we do. When I work with people to come up with a life insurance plan I always insist that they consider budget and do as much as they can within a budget they can maintain.

The problem comes when income fluctuates, or jobs or lost, or unexpected expenses bite into what you thought was a stable budget. I have a recommendation for these situations  and for those who really want to carry more, but the cost is just outside their comfort zone.

Let’s say you have decided that $500,000 is what you would really like to have in force. At a hypothetical $110 a month for your 20 year term insurance policy, it works right now, but you are concerned that even a small change in your finances could upset the apple cart and something will have to go. All too often life insurance is the sacrificial lamb and while it eases the immediate situation, it leaves your family at risk and it also puts you in a position, if you have a health change, of not being able to replace the insurance when things stabilize.

Consider this. Rather than a $500,000, 20 year term policy, carry two $250,000 policies, or $400,000 and $100,000. Give yourself a relief valve, a policy that can be dropped if necessary for financial reasons, while still leaving something in place. I understand that the need is $500,000, but if things get tight and you need some relief, this can provide that change that will keep things afloat, and remember, something (in force) is always better than nothing.

Bottom line. Budget has to be considered when purchasing life insurance. Don’t ever let someone talk you into spending more than you know you can afford, and if you are coming close to that line, consider splitting the coverage.