Affordable Life Insurance Protection for Your Family
Learn About The Drawbacks of Term Insurance Policies
If you’re shopping for term life insurance coverage to protect your family you may be wondering what are the drawbacks of term insurance?
Although term insurance may sound like a good idea, you should be aware of the potential consequences of purchasing term life coverage.
Yes, term is cheap, and Yes, you can get the maximum amount of life insurance protection for your family based on your budget; however, there are some possible potential drawbacks.
Term Life Insurance Drawbacks
Cost of New Life Insurance Policy at Expiration – If you outlive your term insurance policy, your premiums to buy a new life insurance policy will be much more expensive, because you are older and your health may have changed.
This only applies to you if you need life insurance to last longer than your selected duration (term) of your policy. That means, your need for coverage has changed after you purchased your original life insurance policy.
Your premiums increase every time your policy is renewed, because the chance of dying increases with age. The older you get, the higher risk you will die during your new life insurance policy term.
Conversion Premiums – If you do convert your term insurance to permanent life insurance – your premiums will be much higher for the same amount of life insurance.
This is only reasonable, since permanent insurance provides coverage guaranteed to last your entire lifetime, as long as you pay your premiums on time.
Whereas, with term life policies, there is no payout of the death benefit if you are alive when the duration of your term policy ends.
Rising Rates – Premiums usually increase with age, unless you buy level term life insurance.
Some term life policies have level premiums for 5 years, then the premium increases, every five years.
However, level term life insurance policies offer guaranteed premiums that remain the same for up to 30 years.
Uninsurable – When your term policy ends, you may not be in good health, and find yourself unable to qualifyfor a new life insurance policy at that time, should you need protection to last beyond your original term.
No Cash Value – Term insurance policies have no investment feature and build up no cash value inside the policy.
However, this is one reason term insurance is so cheap. All the premiums paid to the insurance carrier are to cover the cost of the insurance, and you won’t receive a refund at the end of the policy term.
No Loans – Since term life has no cash value, there are no loans available from your term insurance policy.
Advantages of Term Life Insurance
Although term insurance has several disadvantages, there are some important advantages to buying a term life policy.
Disadvantages of Term Life Insurance
Life Insurance Quotes
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Highly Recommended – Haven Life
Haven Life uses the information provided in your application to make an instant decision on your application. Healthy, qualified applicants (based on the information provided in your life insurance application) can be insured immediately with no medical exam while other applicants can receive immediate coverage pending a medical exam.
Applicants age 60-64 are eligible to apply for up to $1 million in coverage; subject to underwriting approval.
Some qualified applicants (U.S. citizens up to the age of 59) will be able to finalize coverage without the need for a medical exam. The majority of applicants are still required to take a medical exam.
Keep in mind: Issuance of the policy or payment of benefits may depend upon the answers given in the application and the truthfulness thereof.