Life insurance can offer vital income protections for breadwinners in a family. It can also help to provide for burial and funeral expenses, function as a tax shelter, enhance estate and legacy plans, and much else besides. But with rising costs of living and somewhat stagnant wages, finding affordable coverage can sometimes be a challenge.

What Is ‘Affordable’?

There are at least two aspects to “affordability.”

Firstly, there is a measurable, financial aspect. This comes down to cashflow, expense-to-income ratios, and other money metrics. Since these numbers generally are what they, there is an objective quality to this aspect of the question. Because of this, your finances will be the focus of most conversations concerning what is or isn’t affordable for you or your family.

Secondly, there is a perspectival or subjective element. This may be what, from a psychological point of view, happens to “strike” a person as reasonable or not. There can be a wide variance, here. A lot will depend upon how much familiarity a person has with a particular industry. For instance, I know nothing about dairy cattle. So, when it comes to purchasing one, I wouldn’t know a good price from a bad price or a good value from a poor one.

Tracking Expenses

Before you can gauge affordability, you’ll want to get a handle on certain figures.

M.U.G. Expenses

Your basic, essential, non-negotiable expenses are frequently summarized under the acronym “M.U.G.,” standing for “Mortgage” payment, “Utility” costs, and “Grocery” expenses.

They’re “non-negotiable” in the sense that you need basic necessities such as food, shelter, and water to live. But there is a bit of negotiability in the following sense.

If you’re living above your means in somewhere like Compton Heights, Kirkwood, Ladue, Lake Saint Louis, Old Jamestown, or Wildwood, then you may need to rethink your living situation.

Sustainability is one key to keeping M.U.G. expenses in check.

When you have pared these costs down, think of the final numbers as your bedrock needs.

Discretionary Expenses

Beyond your basic living expenses, you’ll probably spend some money on non-necessary items. These may include costs for dining out, entertainment, and luxury items.

I won’t try to summarize everything, here. But commonly this will include attending Blues’ or Cards’ games, eating at the various restaurants in St. Louis, going to the movies, and so on.

These are going to be on your want list, as opposed to your needs list.

If budget cuts are necessary, these are the expenses that will – or should – get axed first.

Saying that, however, I am not being cavalier or even advising an ascetic lifestyle.

St. Louis has a lot of no-cost or low-cost activities. We have a world-renowned zoo. We have the art museum. Even the St. Louis Municipal Opera Theatre (the MUNY!) has free seats – if you arrive early enough.

Understanding Your Retirement Funding

But you also want to factor in your retirement funding.

Many people are struggling to put away a few dollars in their employer-sponsored plans. There can be any of a number of different situations.

But if you’re making $150,000 and contributing $25,000 a year to your 401(k), but you have no life insurance and your spouse is staying at home with your four kids, you might want to do a bit of reallocation of funds in order to protect your survivors in the tragic event of your untimely death.

Cash Value Vs. No Cash Value

Another thing to think about will be the question of whether or not you want insurance that accumulates cash value.

Many people have strong opinions, and I won’t dive deeply into this topic, here.

But, suffice it to say that when we’re thinking about premium dollars, it matters for our “affordability” calculation whether you’ll be paying for “pure” insurance (via a term policy) or whether your policy will have a savings component (for example, as whole-life insurance has).

I’m not advising one or the other. I’m just saying that it changes the mathematics.

Get a No-Cost, No-Obligation Review

We have experience dealing with St.-Louis-area families.

We can factor in all of the above-mentioned considerations – and others as well.

Call today for a detailed review of your situation.

(636)447-1169

Or use the contact form, HERE.