The Good and Bad of a Term Life Insurance Policy
A life insurance policy is one of most important insurance policies to invest in, as it provides financially security for your loved ones after you are gone. When looking for the right policy, there are two main options, a term life policy and a whole life policy. There are many pros and cons that are associated with a term life insurance policy that can help you make the decision of what policy you should invest in.
The pros of a term life policy, include:
- Price – term life insurance policies are the least expensive life insurance policies that are available, and are much less expensive than a whole life policy.
- Coverage for short-term needs – a term life policy will provide coverage for any temporary obligations, such as paying off a mortgage in case you pass away before you are able to.
- Understandable – term life policies are very simple, providing pure protection for when you pass away without any complicated variables.
- Conversion options – typical term life policies give you the option to convert them into a whole life policy without having to show proof of your current health situation.
The cons of a term life policy, include:
- Increasing costs – although the cost of a term life policy start low, they can dramatically increase after the initial guaranteed period ends.
- Has a deadline – term life policies are not meant to last your entire life, they are only meant to last for a certain amount of time. If you outlive your policy, your coverage will end.
- No cash value – term life policies do not have the option to build equity over the life of the policy.