Term Life Insurance - The Pros and Cons
Term Life Insurance - The Pros and Cons
A life insurance policy means that an individual has an immediately established estate to leave to their beneficiaries once they pass away. It is of particular importance for the person in a household that is the primary income earner to consider life insurance in order to continue to provide for his or her family after they are gone. Term life coverage is perhaps the most popular type of insurance available but it individual must carefully weigh both the pros and cons in order to determine whether or not this particular type of life insurance is the right choice for them.
There are two distinct disadvantages that term life has when compared to other types of policies. The most obvious of these disadvantages is the fact that term life insurance only provides a temporary amount of coverage. As the name implies this type of insurance lasts for a set period of time and then expires. If a person outlives the term and chooses to renew the policy or purchase a new one, they can expect to pay higher premiums especially if their health has deteriorated significantly since purchasing the original policy. This can turn out to be a more expensive type of life coverage in many cases.
The second disadvantage of a term life policy is the fact that it does not include any type of investment opportunity or cash value. Several types of life policies are available that allow an individual to cash out all or part of their policy if they face financial hardships. Being able to choose to invest all or part of the monthly premiums can also help the policy's cash value to grow quite a bit. If a person outlives their term they will not receive any of the money back that they have paid in the form of premiums over the course of a policy.
In the list of advantages that come with a term life policy perhaps the most pronounced is the fact that they almost always come with lower premiums. Term life policies, especially for younger individuals, are by far the cheapest type of life insurance a person can buy. If, however, a person is close to retirement age they will likely find it difficult to purchase a term life insurance policy. Despite the fact that these policies do not allow any investment opportunities, the lower rates do mean that a person has more money to place in investment that might more lucrative in the long run.
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