subject: Term Life Insurance- Pros and Cons of Term Policies [print this page] Term Life Insurance- Pros and Cons of Term Policies
Shopping for life insurance can be a very confusing and complicated task if you aren't prepared for what you are getting involved with. There are plenty of different policies and types of coverage out there to choose from. For people who need coverage for a limited or specific amount of time, term life insurance policies are generally going to be the most effective option. Term insurance is exactly what it sounds like: life protection that is purchased for a specific period of time based on a certain life event or type of need that a person has.
The benefits and negative aspects of term life policies need to be explored before you invest in any type of coverage. It doesn't matter how much you want to buy or what you already know because you really have to look at what these policies can and can't do for you. Here are some pros and cons to keep in mind.
Term Life Pros:
-Less expensive coverage during the policy period
-Policy is basic life insurance at its best
-Can be renewed with guarantee or converted to whole life
-Provides large coverage amounts with low costs
-Specific term of coverage to handle certain life events
Term Life Cons:
-The premium rises with every renewal
-There is no coverage past age 85
-Policies have no cash value or investment option
-You don't have any 'rights' to continue the policy regardless of age and health
-The insured must die before anything is paid out
-Cannot borrow against the policy
These are the basic good and bad aspects of a term life insurance policy. You need to make sure that you look at these carefully and consider anything else that will affect your decision before you make a choice.
Term insurance is ideal for people who just need a death benefit for a specific period of time, regardless of their financial situation. The policies can offer the protection that they need and nothing else, which makes them a lot easier to deal with than whole life policies. For people who want investment options or long-term coverage, whole life insurance might prove to be the better option. Keep these things in mind when you are shopping for life insurance, regardless of what type of policy you choose or how much you have to spend. In order to buy the right protection you really need to know your options.
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