Term insurance is one of the common insurances that every salaried or self-employed person should invests in. It offers financial coverage which secures your loved ones on your untimely demise. Though many people want to buy a term plan, a lot of them find it difficult to weigh the pros and cons of buying a term life insurance plan. Let us look at a few advantages and disadvantages of term insurance plans.
Advantages of term plans
- The price
Term plans have premiums that are not as costly as compared to permanent policies. With the same benefit amount, term plans would cost you much less. This factor attracts a growing number of buyers for term plans.
- Temporary
Term insurance would be temporary. This is what makes the choice flexible, allowing you to insure a specific length of time. For instance, you can have a term plan during the length of a mortgage. Also, you can opt out of the plan easily. It can be difficult to opt-out of permanent life insurance.
- Simple
The terms of the policy are simple to understand, unlike some permanent policies which may have difficult-to-comprehend options and conditions.
Disadvantages of term plans
Term plans have some disadvantages as well. While you are choosing a term plan, you need to keep these points in mind and find the best term insurance plan in the market, which has fewer problem areas or disadvantages.
- No cash value
A term insurance plan is not meant to build up cash value or provide you with finance at difficult times. The only purpose of the plan is to offer a death benefit to your financial dependents.
- Claims
The chances are that you would not be claiming your term insurance plan. Only about 1% of all term insurance policies end up in a death claim. Since there is a possibility that you might leave your family stranded in a financially difficult position, a term plan is a good remedy.
- Availability
Term insurance policies are not available at every age. Once you are above 65 years of age, you would find it quite difficult to find term insurance plans.
Every insurance plan comes with some advantages and disadvantages of term insurance policies. They are different from the permanent policies and you can leverage a term plan’s features to suit your needs. If you compare the plans from different insurers to find the best term insurance plan, you will not have to worry at all.
