Don't drop your life insurance

Consumers with cash value policies might not be able to skip premium payments without losing coverage, says Tommy Smoot, vice president of life product strategy and marketing for The Guardian Life Insurance Co. of America in New York.

"With (whole life) insurance, if you're in a situation where you can't pay your premium, you can actually tap into those values as a way to pay," he says. "It's called an automatic premium loan feature."

How long policyholders can use cash value reserves to pay their life insurance premiums depends on how long they've owned the policy and the reserve they've built up, Smoot says. However, there is a catch. Automatic premium loans can prevent a policy lapse, but you'll also get charged interest. For whole life holders just looking for a little bit of financial relief, Smoot recommends using policy dividends to temporarily lower premiums.