4 Crucial Tactics For Your Family To Avoid Financial Hardship

Dec 2, 2022 | Personal Insurance

Avoid Financial Hardship

Personal finance is hard to manage even when you’re good at math. Managing your finances when you’re single might be easier, but having your own family is a different story. Bills and expenses increase as your family grows. Unexpected events like this pandemic can cause unemployment, business closure, and death. These unforeseen events can cause your family to fall into serious financial troubles. But don’t be anxious. There are some ways to help you take control of your family’s finances. In this article, Advantage Insurance Solutions helps you and your family avoid financial hardship using 4 crucial tactics.

4 Crucial Tactics For Your Family To Avoid Financial Hardship or To Evaluate Life Insurance 

Taking control of your finances can help your family avoid financial troubles. Managing your finances can be challenging, especially for families with kids. But it can be done. Little by little, you can take control of your finances and achieve financial stability. It is best to involve your whole family when making financial plans. Having their cooperation will make it easier to handle the family’s finances.

Create an Emergency Fund to Avoid Financial Hardship

Having an emergency fund is like having an umbrella when it suddenly rains. An emergency fund will cover your financial expenses in case of unexpected events. If you lose your job or suffer from medical issues, an emergency fund will prevent you from going into debt. According to financial experts, your emergency fund must be enough to cover at least 3-6 months of your monthly living expenses. 

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Common Monthly Expenses 

  • Food
  • House Mortgage or Rent
  • Utilities
  • Insurance Premiums (Health, Auto, Homeowners)
  • Transportation Expenses
  • Personal Expenses
  • School Fees
  • Debt

Manage Your Credit Score

A credit score is a significant indicator of your financial status. Taking control of your debt can lead to financial freedom. Having a good credit score provides financial incentives. A person with a good credit history usually gets lower interest rates and loan fees. You can save the interests you earn from lower interest rates for emergency funds and retirement. Here are some tips on how you can manage your credit score:

  • On-time payment of bills
  • Do not miss your bills payment
  • Do not use all of your credit limits

Better Money Habits

Practicing better money habits prevents your family from facing severe financial problems. Budgeting is tricky, and so is going into debt. Live a lifestyle your paycheck can afford. Though hard, you can achieve financial freedom with proper financial education and budgeting. Here are some better money habits you can apply to secure your family’s financial future:

  • Prioritize your needs rather than wants. This will significantly help you budget your monthly income. Here are the essential expenses you should prioritize:
  • Rent/ Mortgage
  • Utility Bills 
  • Food expenses 
  • School Fees
  • Insurance (Health, Homeowner’s, Auto Insurance, Life Insurance)
  • Record your monthly expenses and look for ways to reduce your spending. Identify unnecessary expenses you can forego to cut back on your monthly spending.
  • Follow the 50/30/20 rule. Following a budget will prevent you from overspending and help you save more money. 
  • Keep track of your spending progress and regularly evaluate your budget plan.

Evaluate Your Life Insurance Coverage

Life insurance will help your family get back on their feet in case of your sudden death. Ensure you have enough life insurance coverage so your family will not face financial stress in case of your sudden demise. Annual evaluation of your life insurance coverage helps determine if you have enough coverage to sustain your family’s financial needs when you’re gone. Make sure your life insurance policy will cover the following:

  • End-of-life expenses
  • Credit card and mortgage loans
  • Your children’s education
  • Financial support for living expenses until your family can earn on their own

How Life Insurance Avoids Financial Hardships

Life insurance provides financial protection to every family. It provides various financial benefits that help prevent families from suffering from financial hardships. Life insurance is an umbrella when financial troubles start pouring into your family. 

Benefits of Life Insurance

Depending on your financial goals, life insurance can bring many benefits. Whatever your financial goals are, one thing’s for sure, life insurance can help you become financially stable. Life insurance provides the following:

Family support

In your untimely demise, life insurance provides death benefits to your beneficiary. Your life insurance payout can support your family until they can earn independently. 

Tax benefits

The government does not tax death benefits from life insurance. Interests earned from life insurance with investment features are tax-deferred. Tax deferment helps investors grow their money at a faster rate. 

Income Replacement or Retirement savings

Policyholders can use their investment earnings while they are still alive. They can use the interest earnings coming from their investment as an income replacement or retirement savings. 

Peace of Mind

Knowing you have a backup plan in place in case of death gives peace of mind to policyholders. 


Some types of life insurance offer investment options. Investment earnings from life insurance are tax-deferred. Investment earnings accumulate faster in tax-deferred investments rather than in taxable investments.

Types of Life Insurance

There are two basic types of life insurance available in the market. These two types of life insurance have varieties to meet policyholders’ financial goals and budgets. 

Term Life Insurances

This type of life insurance offers protection for a specific period. It typically comes in terms of 10, 20 or 30 years. This is the most common and affordable type of life insurance. There are different types of terms you can choose from:

Level Term

Level-term life insurance offers a fixed premium and death benefit for the rest of the policy period. 

Yearly Renewable Term

This coverage allows annual renewal of coverage. With this type of policy, premiums typically increase year by year. 

Decreasing Term

This policy is more affordable than level-term insurance. It has fixed premium rates, but the death benefit decreases as it reaches the specified term. 

Return of Premium Term

The setback in most term life insurance policies is you can’t get back the premiums you paid when you outlive your policy. With this type of policy, the insurance company will reimburse the premiums you pay when you outlive your policy period. Though pricier than regular term insurance, it is still more affordable than permanent life insurance. This is a win-win policy for people looking for affordable life insurance with a guaranteed return.

Permanent Life Insurances

This type of life insurance offers lifetime protection as long as premiums are paid. It has an additional feature called cash value. The cash value feature enables some of your policy premiums to earn interest and accumulate. The accumulated interest is available to policyholders in case of an emergency. Permanent life insurance comes in different types. It includes:

Whole Life

With this type of policy, policyholders pay a fixed premium for the entire policy life. It provides a guaranteed death benefit and cash value growth.  

Variable Life

This policy is for people looking for protection and investment. It provides death benefits and investment opportunities. The cash value savings in variable life insurance is invested in different investment vehicles. Policyholders can choose where to invest. They can invest in stocks, bonds, mutual funds, and money market funds. 

Universal Life

Universal life insurance offers guaranteed death benefits and more flexible premium payments. Policyholders can use cash value savings to lower premiums when cash value accumulates. Remember that the cash value savings must cover the monthly premiums to avoid policy lapse. 

Variable Universal

This policy is a combination of variable and universal plans. It offers investment options and flexible premium payments.

Factors To Consider in Choosing The Best Life Insurance Policy To Avoid Financial Hardship

Many types of life insurance are available in the market designed to meet everyone’s protection needs. Choose a life insurance policy that will help you achieve your financial goals. To help you choose the appropriate life insurance coverage for you, here are some factors you should consider:

Time frame

If you have a financial need at a specific period, term life insurance is the best choice. Term life insurance allows you to choose the length of your term policy. If you want to be insured for the rest of your life, then permanent life insurance is the way to go. If you pay your premiums, permanent life insurance protects the rest of your life. 


Term life insurance has lower premium rates than permanent life insurance. Term life insurance is perfect for people needing life insurance coverage at an affordable rate. If you have the financial capability, you can go for permanent life insurance, which provides a guaranteed death benefit payout.

Financial goals

The life insurance policy must coincide with your financial goals. Talk to your insurance agent about your financial goals. Insurance agents can assist you in choosing the best suitable policy according to your financial needs and budget.

Hard times come and go, so setting financial goals early is essential. Effective financial management will indeed prevent your family from undergoing financial hardships. Early preparation significantly impacts the future of you and your family. We hope you learned a lot about this article on how to avoid financial hardship.

At Advantage Insurance Solutions here in Denver, CO, we help families financially prepare for unexpected events. We help find the right life insurance products to meet every family’s needs at the best value. Call us to discuss how we can secure your family’s future today!

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