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Life Insurance Basics

Life insurance budgeting

If you are avoiding purchasing life insurance because you think you can't afford it, think again. Research shows that by eliminating some non-essential expenses, you can indeed budget for life insurance.

A 2017 study conducted by Life Happens and the Life Insurance Management Research Association (LIMRA), revealed that 66 percent of American households don't have life insurance because they think it's too expensive. Unfortunately, many people tend to overestimate the cost for coverage.1

For example, when asked the premium of a 20-year, $250,000 term policy for a healthy 30-year old, the median estimate was $500 a year, more than three times the actual cost. The reality is that the average cost would be much closer to $160.00 a year - or just a little over $13.00 a month according to the study.

If this comes as a surprise to you, you're not alone. And, if you don't think that your budget will budge enough to afford a small monthly life insurance premium, then consider what you spend on other non-essentials that will typically cost you more than $13.00 a month. Here are just a few examples to get you thinking:

  • A week's worth of coffee at Starbucks
    A 16 oz. cup of brewed coffee at Starbucks averages $2.10.2 If you buy a cup a day, Monday through Friday, that's $10.50 a week. Multiply that by four, and you get a grand total of $42.00 a month. Try USA Today's coffee cost calculator to estimate how much you spend on coffee and if brewing it at home is a good trade off for being able to afford life insurance.
  • The latest video game
    According to, a new video game averages $49.99.3 If you don't think you can afford a life policy, you might consider trading the newest game release for the security and peace of mind that life insurance can bring.
  • A new outfit
    How much do you spend on new clothing every month  $25, $35, $50, or more? Foregoing a new pair of jeans or shoes when you already have a full closet can be that little extra you need to be able to afford a life insurance policy.
  • Tobacco
    The average cost for a pack of non-generic cigarettes (as of 2014) is $6.28, including federal, state, and local excise taxes.4 If you only smoked a pack a week, that's a little over $25.00 a month. Kicking the habit is not only beneficial for your health, but for your wallet as well.

There are just a few examples of expenses you may want to consider adding back to your budget if you'd rather have a life insurance policy. If you'd like to read more about finding affordable life insurance, visit the Protective Learning Center.


1. 2017 Insurance Barometer Study, Life Happens/LIMRA

2. Coffee cost calculator Starbucks estimates are based on a 16-ounce Grande coffee at $2.10 per cup. Home-brewed estimates are based on the average cost of Folgers and Maxwell House ground coffee for a 16-ounce serving.


4., Economic Trends in Tobacco and The Tax Burden on Tobacco (1970-2018)



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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

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