Life insurance might cost less than your monthly iPhone bill.  It sounds crazy, but it could be true.

The Labor Department released a new statistic on middle-class budgets, showing how the recession has affected spending.  While most middle-class families have cut back as much as 15% on purchases for clothes, entertainment, and eating out, they’ve increased their spending on cell phones by about 10%.

The Wall Street Journal’s accompanying article headline says it all:  ”Cellphones Are Eating the Family Budget.”

While I object to the use of “cellphone” as one word, the idea has merit.  Usage-based data plans encourage you to suck up bandwidth to your heart’s content.  If you watch YouTube videos for 10 minutes a day, you’ll eat up 1GB of data in less than a month.   If you listen to Pandora for an hour a day, you’ll burn between 1.5GB and 2GB a month.  Heaven forbid you stream a movie on Netflix.

So How Much Do Smartphones Actually Cost?
According to the Wall Street Journal, the average household spends about $1,200 on phone service.  If your household has more than one smartphone, your family might be paying more than $4,000 per year, way more than what you’re likely to pay for cable or internet service…or life insurance.

Does it seem strange to anyone else that families will pay $4,000 a year for the privilege of watching cat videos on their smartphones, when as many as 95 million families have no life insurance?  Are motorcycle crash videos really the best use of family finances?

Life Insurance vs. Smartphones
Life insurance policies are far less expensive that many data plans.  For example, CNN Money’s retirement guide notes that a 40-year-old man in good health who buys a 20-year term life insurance policy might expect to pay $350 per year for a $500,000 policy.  That’s $350 per year, compared to the $4,000 per month many multi-phone families currently expend.

It’s time to re-think where your money goes…into a cell phone provider’s pocket, or into the future of your own family. We might have to think of another name for the so-called “smartphones” because in terms of budgeting, they’re anything but.