Advantages and Disadvantages of Term Life Insurance

1. Price

Term life insurance premiums will be lower when compared to permanent policies with the same benefit amount. In other words, no matter if you buy a $1 million dollar life insurance policy, or a $10 million life policy; term will always be less expensive compared to a permanent life insurance policy.

Term life is the biggest bang for you buck if you’re looking for the maximum amount of death benefit for your premium dollar.

2. Temporary

Term life insurance is temporary insurance. It’s an excellent choice when you need to insure a specific length of time such as a mortgage, sba loans, or your children’s education. If you’re a young couple, you most likely don’t have a huge cash reserve at this stage in your life. 

If the bread winner of the family were to die, the family will most likely be left in a horrible financial situation. A term policy would protect this situation by covering the family during the working years and allowing them to save and provide protection once they enter the retirement years.

3. Simplicity

There are a variety of life insurance types. Some are more complicated than others. A term life policy is simple to understand compared to some permanent life insurance policies and options. Term is very basic- you pay your premium and you receive coverage for the selected term. Permanent life insurance has confusing parts such as cash value, policy loans, paid up additions, etc. These can get quite confusing for shoppers who want a basic life insurance policy.

4. Flexible

Term life can be cancelled easily if needed. Opting out of a permanent life insurance policy can be quite the headache in some situations where you terminate the policy too soon.

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