What Are The Pros And Cons Of Term Insurance?

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What Are The Pros And Cons Of Term Insurance?
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Table of Contents

• What Are The Pros And Cons Of Term Insurance?
• Advantages
• Disadvantages
• Who Should Get Whole Life Insurance?
• Why should someone get Universal Life insurance?
• Why Do People Get Permanent Life Insurance?
• Term Life Insurance
• Permanent Life Insurance
• Why Should I Get A Life Insurance Quote?

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What Are The Pros And Cons Of Term Insurance?

• Term Insurance is one option out of many when it
  comes to Life Insurance. Its never easy to have
  to pick and choose between them, but in the end,
  everyone has to settle on a plan that they
  believe best suits them. Many companies provide
  term insurance for their employees and there are
  many more people who seek out their own term
  insurance policies, but is one of the most
  popular plans the best?
•  
• Here are some of the advantages and disadvantages
  of Term Insurance

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Advantages

• Remember that term insurance is among the most
  common forms of insurance and is aptly named in
  that it provides life insurance for set terms
  that can last anywhere from one year to decades!
•  
• Pro This has the greatest return for a minimum
  amount of investment. Term life insurance doesnt
  involve high premiums and lots of hidden fees
  like some other plans. You simply buy it and
  renew it if you want.
•  
• Pro Term insurance involves zero hassle and is
  the get it and forget about it kind of policy
  that makes it easy and carefree.
•  
• Pro Its also one of the cheapest plans to buy,
  making it an affordable choice for many.

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• Pro Term insurance isnt front-loaded like many
  permanent plans. This means that the premium will
  always be the same for the term and wont tax a
  persons budget during those first few years with
  massive payments!
•  
• Pro Theres no long-term commitment with term
  insurance as it will expire at some point in the
  future at which time one can choose to renew it
  or simply end the term without any penalties.
•  
• Pro The other advantage of term insurance
  policies is their flexibility. A person has many
  different options to choose from with term
  insurance with the option of taking twenty, ten,
  five, and even just one-year contracts.

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Disadvantages

• Con Renewals can limit coverage. At the end of
  a term for insurance, renewing it may not always
  be automatic, especially as a person ages. The
  older a person gets, the more likely life
  insurance companies are to add clauses to the
  policy, limit coverage, or increase premiums.
•  
• Con The biggest drawback to term life insurance
  is that it usually provides limited coverage.
  This form of coverage can be limited to death
  benefits only in certain circumstances.
•  
• Con It doesnt accrue funds. These term
  insurance plans offer no dividends to the keeper
  and cant be cashed out because they dont
  actually accrue any real cash because the person
  usually outlives the term of the contract.
•  

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• Con Its taxable. Other forms of life insurance
  have considerably more protection from taxes,
  whereas term insurance is taxable right from the
  get-go. This means that every dollar they pay
  into the plan ends up being reduced a little come
  tax time.
•  
• Overall the benefits to term insurance are that
  people who simply need to take care of their
  family, just-in-case, can get this insurance as a
  basic emergency fund should anything happen to
  them, but thats about the limits of what it
  does.

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Who Should Get Whole Life Insurance?

• If you are one of many who have decided to get a
  permanent life insurance plan, then you may have
  also realized that its actually an umbrella term
  that covers a few different life insurance plans.
  So, deciding between whole life, variable, and
  universal life insurance can be a bit tricky. For
  those looking at whole life insurance, here are a
  few advantages and disadvantages of it
•  
• Keep in mind that whole life insurance is a form
  of coverage that covers the person from the time
  that they get it to the day that they pass on.
  Its also one that usually has a locked-in
  premium that stays the same as the years pass.

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• One pro to whole life insurance is that it has
  the most guarantees of permanent life insurance,
  making it the stable choice for those who want a
  concrete, dependable plan to rely on. It also has
  more of the nature of an insurance plan that
  doesnt require people to check in on it
  regularly. You simply make your payments and are
  covered.
•  
• The other pro is that, unlike term insurance,
  this is a permanent life insurance plan that
  covers people throughout their entire lives and
  never expires unless the owner of the plan stops
  making payments, of course!
•  
• It also has a guaranteed death benefit and that
  benefit only grows as you get older, meaning that
  people will get more out of this policy the
  longer they have it.

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• Whole Life Insurance also can be used for
  dividends. This means that, if a person needs the
  money, they can cash out all or part it. This is
  better than term insurance in that the cancelling
  of term insurance usually results in no
  cashback. 
• This form of insurance also includes additional
  living benefits that people usually dont get
  through other forms of insurance. Whats usually
  included is an accelerated death clause which
  allows the full payment if the owner is diagnosed
  with a terminal illness.
• Whole Life Insurance also includes benefits if a
  person is diagnosed with a chronic illness or
  requires long-term care.
• One Con is that, because it is a policy for life
  and not according to a term, the premiums are
  usually higher, but so are the payouts. The
  premiums will increase as people get older,
  however.

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• The other drawback is that people will find that
  owning a whole life insurance policy is not
  unlike having a mortgage in the first few years
  Fees and premiums are high and the benefits are
  few early on. This does improve considerably
  after the first five years, though, as whole life
  insurance premiums are front-loaded.
•  
• There are also limits to contribution limits.
  Other plans allow for a person to contribute more
  than they need to create a bigger value to their
  policy, where is this one is set and cant be
  increased beyond a maximum value.
•  
• Overall, there are positives and negatives to
  this program, but for those looking for a
  rock-solid, dependable plan that they can pay
  into and forget about, this is it!

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Why should someone get Universal Life insurance?

• Among all the types of life insurance out there,
  everyone eventually has to settle on one that
  they know they will be happy with for the next
  few years or even the rest of their lives. So,
  the question for many becomes is universal life
  insurance the right choice for me? Here are some
  of the pros and cons of universal life insurance
•  
• First, remember that universal life insurance is
  a form of coverage that allows a person to
  control how much of their money goes into
  benefits and how much goes into a cash portion
  that acts as a kind of savings account that a
  person can access at any time.

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• Pro The biggest advantage to having universal
  life insurance is the level to which a person has
  control over it, permitting a great deal of
  investment and the ability to grow those premiums
  into a healthy little nest egg.
•  
• Pro It permits a person to have extra cash on
  hand, if they need it. With the cash component of
  the coverage accessible to the owner of the
  policy, they are able to use it for a down
  payment on a house or anything else they like.

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• Pro It usually has a guaranteed minimum death
  benefit. That is to say that, even if a person
  doesnt wisely use some of the money in the plan,
  there is usually a point where they cant spend
  anymore, because of the minimum guaranteed
  benefit. This acts like a kind of a safety net
  for those adventurous investors.
•  
• Pro Premiums are flexible. This is great for
  people who need an insurance policy that can fit
  the needs of a fluctuating budget. For the good
  times, one can pay higher premiums than they need
  to and they can even pay lower premiums when
  their budgets are tight. For those lean times,
  they are also permitted to skip the occasional
  one.

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• Con The ability to tinker with this form of
  insurance can also be its Achilles Heel if left
  under the purview of those who might not make
  wise decisions. One could potentially find the
  insurance claim reduced all the way down to its
  barebones in a short period of time.
•  
• Con The cash access component to universal life
  coverage can also have some negative
  repercussions if its not handled well. A
  universal life insurance policy, if treated too
  much like a savings account can have its owner
  find that its not worth very much years later if
  theyre constantly borrowing from it.
•  
• Con There is some risk involved. For those who
  prefer to have something that cant be altered
  and is one hundred percent guaranteed, this is
  probably not the plan for them.

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• Con Meeting the basics really only meets the
  minimums for the premiums which means that if the
  policy is never given more than the most basic
  payments, then it never has the chance to accrue
  any major growth in cash value.
•  
• Overall, universal life insurance is a good bet
  for those who like control over their plan and
  tend to be risk-takers. Those who want stability
  in their plan should probably look for something
  else.

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Why Do People Get Permanent Life Insurance?

• There are many people out there who have already
  gotten insurance, but there are many more who are
  questioning whether or not to switch to a
  different policy or theyre simply looking to get
  insurance for the first time. The only problem
  they tend to have is that they dont know what
  the different types of insurance are or which one
  is the best for them. Here are the different
  types and why permanent life insurance is usually
  the most popular

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Term Life Insurance

• Term Life Insurance This is your sort of basic
  coverage plan that is also the least costly.
  Virtually every insurance company offers this
  plan because its terms vary from five to
  twenty-five years, but the most popular plan by
  far is the annual plan.
•  
• The annual plan allows for a yearly renewal with
  little in the way of obligations to the company.
  This is also what makes it the cheapest, but its
  almost always for a set amount and usually only
  in case of untimely death.

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Permanent Life Insurance

• Permanent Life Insurance This is actually more
  of an umbrella term to cover what is an insurance
  policy that will cover a person from the time
  they get it to the time they die, and yes it
  doesnt matter how long they live, theyll still
  receive it!
•  
• This is the insurance that people usually swear
  by because it never expires. The only real
  drawback is that it can involve high premiums,
  depending on the coverage. It is the worry-free
  choice for most, though.

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• There are three types of Permanent Life
  Insurance
•  
• Whole Life Insurance This is one of the more
  common forms of permanent life insurance. It
  gives a bit more peace of mind in that the
  premium is locked in from the moment the coverage
  starts. People who get life insurance early
  benefit the most form Whole Life Insurance as the
  premium is likely to be lower when they get it at
  a young age.
•  
• The great thing about this plan is that the
  premium doesnt change, so a person can count on
  the same payment every month. The only negative
  is that because the premium never changes,
  neither does the amount of coverage. This means
  that even with inflation a hundred-thousand-dollar
  policy will still be a hundred-thousand-dollar
  policy twenty or fifty years later.

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• Variable Life Insurance This policy allows for
  a little more leeway on the investors part.
  There is always a guaranteed minimum amount that
  the policy will cover, but there are also funds
  that can be invested. This does involve the
  potential for a much higher reward.
•  
• The downside is the investments may not yield
  returns or they might even go bust. As a result,
  the amount that the death benefit will pay out
  can fluctuate a great deal.
•  
• Universal Life Insurance This coverage allows
  for the person to decide how much they want to go
  into a cash value portion and how much goes into
  the death benefit. This allows a person to
  withdraw part of the amount accrued to pay off
  debts or buy a home, but once its gone, its
  gone!
•  

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Why Should I Get A Life Insurance Quote?

• When people are in their twenties, life insurance
  seems irrelevant in comparison to their youth,
  but as people get older they also get married,
  have kids and settle down. Its also then that
  they realize that something could happen to them,
  but getting a quote on life insurance seems like
  a hassle. Its always on their list of things to
  do, but never quite reaches the top.
•  
• Here are a few reasons as to why its time to go
  out and get that life insurance quote today

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• To take care of your family. This is the biggest
  reason why everyone gets a life insurance quote
  and its also the best one. People who need life
  insurance are the ones who know that, if
  something happens to them, their spouse and kids
  would experience hardship as a result.
•  
• For this reason alone, people get quotes so that
  they can ensure that their family is taken care
  of and it gives peace of mind.
•  
• To compare pricing. If a person is looking at
  getting life insurance, then they need to know to
  avoid impulsiveness. Just going out and buying
  any insurance policy can result in deep
  dissatisfaction later on. Going out and getting a
  few different quotes is the wisest thing to do
  before taking the next step towards getting life
  insurance.

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• To compare policies. Between term and life
  insurance policies, there are at least a dozen
  different forms of life insurance out there and
  the premiums and fees on each differs greatly.
  So, even before deciding on the best policy,
  knowing the cost might just eliminate a few
  simply because theyre out of ones budget.
•  
• To have coverage in case of long-term disability.
  It isnt just bereavement that a person has to
  worry about in life. There are also situations
  where the breadwinner of the family might find
  themselves diagnosed with a chronic illness that
  will prevent them from working. Accidents can
  also result in long-term disability and there are
  insurance policies that can cover people should
  this happen. Knowing the cost of this kind of
  coverage is covered in a quote.

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• To know how much it costs to have lifetime
  coverage. One can get term insurance and one can
  get permanent life insurance. Term insurance is
  cheaper, but it does, inevitably expire.
  Permanent insurance will cover a person to the
  day they die, but it is also more expensive.
  Knowing the difference in the price can easily be
  discovered by requesting a quote.
•  
• To get an understanding of the different types of
  policies. A quote is more than just a number on a
  piece of paper. A full quote on the different
  policies that an insurance company has also
  provides information on what each policy covers
  and doesnt cover. It also shows people what
  those prices will be like in one year or ten, not
  to mention list any fees that will be charged.
•  
• Its for these reasons that a quick call to a few
  insurance companies really is worth it to know
  not just what a policy costs, but what it can do
  for you!

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