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When money is tight, consumers cut back on expenses that don’t have an immediate payoff, so it’s not surprising that Americans are skimping on life insurance. But that doesn’t make it a good idea. There are ways to keep insurance costs down when the budget is pinched.

LIMRA, a research organization for the insurance industry, recently reported that 30% of U.S. households have no life insurance, up from 22% in the last survey, conducted in 2004.

“Among households with children under age 18, which arguably have the greatest need for life insurance, 11 million have no coverage,” LIMRA reported.

“More than 40% of Americans say a major reason they have not bought more life insurance is because they have other financial priorities right now, such as paying off debt or saving for retirement,” LIMRA said, citing its survey.

So where should life insurance fit into the big picture? Do you need it, and if so, how much is appropriate?

The answer to this question really depends on your dependents. If you have children under 18, seriously consider getting life insurance, unless you have enough savings and investments to pay their expenses until they’re grown up.

People with non-working spouses or partners should generally also have insurance, as should those caring for elderly parents. Just imagine how much money your dependents would need get along without you.

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For single people, life insurance is not a necessity, and many couples without children can get by without it if both individuals are capable of supporting themselves.

Some young, single people without children do get insurance to lock in the low premiums available if one starts young. And some are attracted by the investment component of whole and universal life policies. But if you don’t need life insurance, there are many other ways to invest that don’t require the long-term commitment these types of policies entail.

If you do need insurance but money is tight, there are some simple ways to economize.

Buy term Term policies are the simplest and cheapest life insurance, paying a death benefit if you die in the period, or term, coverd, typically 10 to 20 years. Many people can get policies worth hundreds of thousands of dollars for only a few hundred dollars a year.

Permanent policies,” like whole life and universal life, can be many times more expensive but will cover you for life and often enable you to build up “cash value” which can eventually be tapped. But these expensive features are not necessary if your main goal is to protect loved ones. It would make more sense to use the money available to get a bigger term policy.

Shorten the term A 20-year term policy taken out on a parent when children are born should protect the kids until they’re of college age. But you could reduce the premium substantially by getting a 10-year policy instead, or one for a shorter term. Then you could buy another policy as the first one expires. It will cost more, but if you buy then you might be able to afford it.

Reduce the coverage The rule of thumb is to have a death benefit equal to five to 10 times your annual income. But if that’s too expensive, get a smaller policy, which will still be a lot better than nothing. When more money’s available, you can replace the policy with a bigger one, or get a second policy. Use the search tool to track down the best deal.

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