The pros and cons of Term Life Insurance

The Basics of Term Life Insurance: 

Term Life Insurance is temporary life insurance protection for a specified period of time-usually to age 65. This is the simplest and most common form of life insurance in the US. Dollar for dollar, Term life insurance offers the most coverage because it is simply providing financial protection in the case of accidental death. There is no cash value that can be withdrawn so term life policies have lower premiums and a low cost of insurance. Under a Yearly Renewable Term policy, the premium is determined at the time you apply and increases at each policy anniversary (as you get older, it becomes more expensive to insure your life). Under a Level Term policy, remains level during initial guaranteed period and then increases dramatically. Term Insurance pays a specific lump sum to your designated beneficiary if you die within the period covered by the policy. The policy protects your family by providing money to replace your salary, and to cover immediate expenses incurred by your death such as funeral expenses and medical bills.

Pros:

Term Insurance initially costs less than other insurance policies mainly because, unlike other policies, it builds no cash value. Term insurance provides the most coverage dollar for dollar. Term Insurance is great for young families, or any family with large financial needs and a tight budget. 

Cons:

Term Insurance premiums increase with age because the risk of death increases as people get older. Yearly Renewable Term Insurance premiums may rise each year, or after the initial guarantee period of 5, 10, 15, 20, 25 or 30 years. Over the age of 65, the cost of Term Insurance becomes very expensive, often unaffordable. Additionally, Term Insurance does not build a cash value so it cannot be used to cover other expenses. Avoid Term Insurance if you are looking to add assets to your portfolio.