Term Life Insurance

Advantages and Disadvantages of Term Insurance

Advantages

• Initially, premiums are generally lower than those for permanent insurance, allowing you to buy higher levels of coverage at a younger age when the need for protection often is greatest.

• It's good for covering specific needs that will disappear in time, such as mortgages or car loans.

• The new 20 and 30 and year products can provide coverage as long as most people might need life insurance.

Disadvantages

• Premiums increase as you grow older, after the term selected expires, providing it renews past that term.

• Coverage may terminate at the end of the term or may become too expensive to continue.

• Generally, the policy doesn't offer cash value or paid-up insurance.

Questions to Consider When Considering a Term Policy

• How long can I keep this policy? If you want the option to renew the policy for a specific number of years or until a certain age, what are the terms of renewal of the contract.

• When will my premiums increase? Annually? Or after a longer period of time, such as five or 10, 15, 20, 30 or even 40 years?

• Can I convert to a permanent policy? Some policies allow you to convert the policy to permanent insurance without a medical exam, regardless of your physical condition at the time of the conversion. These policies are known as "convertible term."