The Pros and Cons of Term Life Insurance

There are two main kinds of life insurance—term life insurance and whole life insurance. Term life insurance is the most commonly purchased of the two, and often considered the more practical even though it expires without maturity. Term life insurance is purchased for a certain number of years, and is generally less expensive than any other type of insurance. As if this isn’t enough, it’s usually renewable and it’s nontaxable. Since term life insurance is less expensive than other types of life insurance and isn’t permanent, it’s considered a great option for people with temporary or short time insurance needs, people who are just beginning in the work force and don’t have much money to spend on life insurance, and/or people who foresee their insurance needs changing in the future.

However, besides the fact that term life insurance expires without maturity, there are also other downfalls to term life insurance. The insured amount is only payable if the policy is still in effect at the time of the person’s death, so it’s important to keep up with renewing the policy, if renewal is an option. Also, premiums are most likely to increase at the time of renewal depending on the person’s age.

Given the above mentioned, plus the fact that a term life insurance policy can usually be converted into a whole life one, many people find term life insurance the most beneficial, This means you usually have the freedom to change your policy if your needs change. Purchasing life insurance shouldn’t be taken lightly. When purchasing life insurance, you need to take into consideration your specific needs (the kind of coverage, how long you need the coverage, etc.) and your financial status. If you simply want coverage for a certain number of years or during a particular time in your life (such as when you are suffering a potentially fatal illness), term life insurance is probably the best option for you.