By Bill Hupp, Life Quotes, Inc.

In a down economy where jobs are scarce and pennies are being pinched, some people favor canceling their life insurance policy in order to put that money towards immediate expenses.

While this may help in the short-term, it could have dire consequences for your family in the long run.

People choose to cancel their life insurance policies for a variety of reasons, many of which are money-motivated: a change in financial situation (loss of job, reduction of salary or hours, additional expenses) or familial situation. Some even get rid of their policy under the assumption that nothing will happen to them – a serious roll of the dice, indeed.

The most serious ramification is the potential that you may be financially crippling your family forever. This could include loss of house, of higher education for your children, or bankrupting your immediate family, according to Joe Clauson, a spokesman for Mutual of Omaha. Even if you change your mind later, it could cost with higher premiums, tax issues for your heirs, even refusal of coverage if your health has worsened.

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