Before buying insurance, especilaly life insurance, you need to think over. Here are the advantages and disadvantages of term life insirance, hopefuuly this could give you some advice after reading.
Advantages of Term Life Insurance
Term life insurances are relatively cheaper compared with whole life insurances. This particularly attracts young people with children as they can get large amounts of coverage for low costs, which is a great relief for those financially stressed families.
Term life insurances are more flexible. Since the coverage of the insurance can last as little as one year, policyholders can have more options. For instance, if you need to cover a short-term debt like the college tuition expenses of your child, you may lock the policy in rates for as few as five years. As your needs of the insurance can vary over time, so can the policy.
Term life insurances are simpler and easier to understand than whole life insurances. As the premium usually stays the same during the term, only three decisions need to be considered: the coverage amount, the length of the term, and the proper insurance company.
Disadvantages of Term Life Insurance
The coverage of a term life insurance is usually not available to people who are in extremely poor health conditions. If you still decide to keep the insurance with serious health issues, you are likely to get stuck with a high premium. Besides, if you choose to renew the term life insurance, the premiums can increase, especially when you are at late ages.
Term life insurances do not have cash value, which means they can never be used as a business loan or as a tool to generate any living benefit. Plus, they have no tax-free, automatic savings feature like the whole life insurances.