subject: Advantages and Disadvantages of Term Life Insurance – Is it Right for You? [print this page] Advantages and Disadvantages of Term Life Insurance Is it Right for You?
Before you take out a term life insurance policy, you should become educated concerning the advantages and disadvantages of this option. Getting a full view of the picture will help you make an educated decision about whether term life insurance or whole life insurance is better for your situation. After all, both are very venerable options for providing your family with financial protection if you should pass away, but you want to select the option that will benefit you and your family the most.
The first advantage that causes some people to choose term life insurance over whole life insurance is the fact that your term life insurance policy can be obtained for a much lower premium. Permanent insurance has a set price, but it is far higher than term policies. This means you can afford to buy higher amounts of coverage for your family when their need for protection is at its highest. For example, if you have a risky job that puts you in daily danger, you will want to obtain life insurance at your young age to ensure your family's safety no matter what. Term life insurance is probably best for you if you have financial obligations that will disappear in time, such as car loans, mortgages, and remaining debt from college.
There are disadvantages as well, which must be considered to make the best choice for you. Term life insurance rates increase over time. Every year you renew your policy, the price will increase because you have aged and are therefore at a higher risk for passing away. Also, the need to remember to renew your policy is something that turns people away from this option. This is because you will either need to renew and pay more the coming year or your policy may terminate, meaning all the money you put into insurance was a waste. Also, there is no cash value or paid-up insurance option with term life insurance.
You must assess your current financial situation and decide where you stand. If you can only afford term life insurance, it will be the better decision for you. If you are interested in cash value options and turning your insurance into an investment opportunity, you will surely have greater interest in whole life insurance. Whatever you ultimately decide, you will be giving yourself and your family peace of mind both as you continue to live and once you have passed on.
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