I’m unemployed. Can I get life insurance?

We’re living through a time of great uncertainty, both for our health and for our finances. Many people have been laid off, furloughed or have lost work hours as a result of the COVID-19 pandemic, and day-to-day life has become increasingly unpredictable. What does that mean for something like life insurance? Is it even worth thinking about applying for life insurance if you’re unemployed, or worried that you might lose your job in the near future?

Aneesha Deshpande, Head of Product Innovation at Haven Life, says yes, most people can still get life insurance if they are unemployed. “In these unstable conditions, it’s more important than ever to make sure that your dependents are financially protected. If you have a need for life insurance and you haven’t purchased it yet, this is still a great time to buy coverage.”

When is the right time to buy life insurance? Deshpande advises people to consider a term life insurance policy any time they experience a “me-to-we” moment: a marriage, a home purchase, or the birth of a child, for example. These moments happen whether there’s a global pandemic or a nationwide recession or not, and they happen whether or not you’re employed — so let’s look at how you can successfully apply for life insurance when unemployed.

Why you should apply for life insurance … even when unemployed

You should buy life insurance when you’re unemployed for the same reasons you buy life insurance when you’re employed: because you want to protect and provide for your loved ones in a worst-case scenario. “You should get coverage in place as soon as you need it,” Deshpande advises. “Life insurance premium pricing is lower the younger and healthier you are.” A healthy 35-year-old woman can purchase a 20-year, $500,000 term life insurance policy for about $20 per month.

If you and your partner just had a baby, for example, it’s a good time to get life insurance no matter what your employment status is. And yes, stay-at-home parents can (and should!) get life insurance coverage of their own, even if their co-parent is already covered. For stay-at-home parents in particular, keep in mind that a partner’s income and coverage amount will be considered when determining coverage eligibility.

Likewise, if you recently got married, just purchased a home or are currently paying down co-signed student loans, you might want to consider a life insurance policy. If you were to die before paying off your mortgage or your co-signed private loans, the absence of a life insurance policy could leave your loved ones with significant financial stress. An affordable term life insurance policy from a reputable insurance company provides peace of mind, and you don’t have to be employed to get some of that peace for yourself.

How much life insurance coverage does an unemployed person need?

When asking yourself how much life insurance coverage you need, two factors are generally considered: your income and your dependents’ long-term needs. “Generally speaking, the coverage that you need is a function of both your financial contribution to the household and assets as well as what expenses your dependents will need to cover going forward,” Deshpande says.

While that might sound complicated to determine, an online life insurance calculator can help you out A calculator will take into consideration factors like age, family structure and debts to help you confidently determine your insurance coverage needs. Income is a factor, too, so if you are currently unemployed, list a recent salary to get a more accurate estimate.

You should also ask yourself whether your loved ones will need enough money to cover funeral expenses, pay off debts (including mortgages) or pay for college, and how that might affect the amount of life insurance you purchase.

You might have seen life insurance “rules of thumb” that suggest your life insurance coverage should be between 5 and 10 times your salary. While that kind of broad estimate can be a good start, a life insurance calculator can help you come up with a more specific number that truly reflects your beneficiaries’ needs.

It’s also important to avoid buying too much coverage, especially if you are experiencing a temporary income reduction. Even when your career gets back on track, having too much life insurance can be a hindrance, not a help. If you have more life insurance than your loved ones really need, you’ll end up paying higher premiums — and that isn’t the best use of your hard-earned cash. “That extra money can go into an emergency fund, or you can invest it. It shouldn’t go to excess life insurance” Deshpande explains

Is it harder to buy life insurance when you’re unemployed?

Applying for term life insurance is relatively simple, especially if you begin the process online. Deshpande notes that unemployed applicants will be asked some additional questions about household income, prior occupations and potentially how much life insurance coverage their partner currently has. “The questions are rather straightforward and won’t take up too much of your time,” says Deshpande.

The underwriter will confirm that your household has income to cover the life insurance premiums associated with your coverage. He or she will also take a look at the amount of coverage you’ve requested and evaluate whether it’s appropriate given your income history and earning potential. In some cases, unemployed life insurance applicants can request the same amount of coverage as their income-earning spouse or partner; in others, unemployed applicants are limited to a certain level of coverage (often up to a $1 Million).

The coronavirus pandemic has prompted life insurers to create new options for temporarily unemployed applicants. For example, Haven Life, which sells policies that are issued by MassMutual, is currently accepting temporarily unemployed applicants and will not require them to have a partner who already has life insurance. An underwriter will likely ask about their prior income and occupation, as well as when they expect to return to work — and that information will determine how much coverage they can purchase

Should you buy life insurance if you think you might lose your job?

The right time to buy life insurance is when you have people who rely on you financially. The benefit of buying life insurance outside of work through an agency like Haven Life is that coverage isn’t job dependent. Once you have coverage in place, you’ll be able to maintain that coverage even if your employment status changes — as long as you can keep making your monthly premium payments.

Additionally, buying coverage while you are still employed will reduce the likelihood of questions about income from an underwriter. One less step in the world of simple, digital life insurance.

What happens if you can’t keep up with your life insurance premiums?

What if your financial situation changes and you can no longer keep up with your life insurance premiums? This can be an issue whether you’re employed or unemployed. As we’ve all recently learned, life can throw you into some truly unexpected situations — and you might find yourself in a position where you no longer have enough money to cover all of the expenses in your budget.

One option is to reduce your life insurance coverage. This allows you to continue protecting your dependents and beneficiaries while lowering your monthly premiums to a more affordable level. Keep in mind that it’s much easier to reduce coverage than it is to increase it (which usually requires a new application and is subject to medical underwriting.)

Another option is to take advantage of payment grace periods. If you can’t make a life insurance premium payment on its due date but can cover the cost after an upcoming payday, you might be able to use a grace period to postpone your payment. Haven Life, for example, offers a grace period of at least 31-days where your insurance policy will remain active as long as you make your monthly payment within that period.

MassMutual, which issues the policies sold by Haven Life, is providing special assistance to people affected by the COVID-19 pandemic. Contact Haven Life’s customer success team to learn more and request an accommodation.

Whatever your situation, this is an unprecedented time. Ideally, your term life insurance policy would be affordable enough that you can make the monthly payments regardless of changes to your financial situation. But if you do need to request a postponement or adjust your coverage, talk to your insurer. Most reputable insurance companies are well aware that people are struggling financially right now and are ready to do everything they can to help.