The Cost of Protection v. the Cost of Non-protection

I was talking to a couple recently about life insurance.  They didn’t think that they could afford to buy any.  Now it’s true that some people simply can’t afford any extra expenses, no matter how small.  But most employed people can afford at least a small life insurance policy, even if it means going out a little less.

For a couple who are both 35 years old and in reasonable heath, they can both get 30-year term policies of $100,000 for a total of roughly $40-45 per month.

How does this compare to the cost of a funeral?  The average cost of a funeral these days is about $6,500.

And believe it or not, that doesn’t even include the price of burial and cemetery fees.  $6,500 divided by $40 comes out to between 13 and 14 years.  In other words, if you’re able but not willing to pay $40 a month for life insurance, you’ll need to save $40 a month for at least 14 years in order to have enough money on hand to pay expenses if you die.  But in reality, it will be more than that–if you want an average funeral.  Even if inflation remains very low all that time (say 2 percent), the average funeral cost will be up to at least $8,500 in 14 years.  So you’ll actually have to save for an additional four years to make up the extra $2,000.

Of course, not too many people actually save for their funeral in advance.  So in other words–the choice is to pay now or pay later.


About Daniel

A long-time resident of Colorado Springs. I enjoy reading, walking, and photography.
This entry was posted in Life Insurance, term insurance and tagged , , . Bookmark the permalink.

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