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What Are The Pros And Cons Of Term Insurance?

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Table of Contents What Are The Pros And Cons Of Term Insurance? Advantages. Disadvantages. Who Should Get Whole Life Insurance? Why should someone get Universal Life insurance? Why Do People Get Permanent Life Insurance? Term Life Insurance. Permanent Life Insurance. Why Should I Get A Life Insurance Quote? – PowerPoint PPT presentation

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Title: What Are The Pros And Cons Of Term Insurance?


1
What Are The Pros And Cons Of Term Insurance?
2
Table of Contents
  • What Are The Pros And Cons Of Term Insurance?
  • Advantages
  • Disadvantages
  • Who Should Get Whole Life Insurance?
  • Why should someone get Universal Life insurance?
  • Why Do People Get Permanent Life Insurance?
  • Term Life Insurance
  • Permanent Life Insurance
  • Why Should I Get A Life Insurance Quote?

3
What Are The Pros And Cons Of Term Insurance?
  • Term Insurance is one option out of many when it
    comes to Life Insurance. Its never easy to have
    to pick and choose between them, but in the end,
    everyone has to settle on a plan that they
    believe best suits them. Many companies provide
    term insurance for their employees and there are
    many more people who seek out their own term
    insurance policies, but is one of the most
    popular plans the best?
  •  
  • Here are some of the advantages and disadvantages
    of Term Insurance

4
Advantages
  • Remember that term insurance is among the most
    common forms of insurance and is aptly named in
    that it provides life insurance for set terms
    that can last anywhere from one year to decades!
  •  
  • Pro This has the greatest return for a minimum
    amount of investment. Term life insurance doesnt
    involve high premiums and lots of hidden fees
    like some other plans. You simply buy it and
    renew it if you want.
  •  
  • Pro Term insurance involves zero hassle and is
    the get it and forget about it kind of policy
    that makes it easy and carefree.
  •  
  • Pro Its also one of the cheapest plans to buy,
    making it an affordable choice for many.

5
  • Pro Term insurance isnt front-loaded like many
    permanent plans. This means that the premium will
    always be the same for the term and wont tax a
    persons budget during those first few years with
    massive payments!
  •  
  • Pro Theres no long-term commitment with term
    insurance as it will expire at some point in the
    future at which time one can choose to renew it
    or simply end the term without any penalties.
  •  
  • Pro The other advantage of term insurance
    policies is their flexibility. A person has many
    different options to choose from with term
    insurance with the option of taking twenty, ten,
    five, and even just one-year contracts.

6
Disadvantages
  • Con Renewals can limit coverage. At the end of
    a term for insurance, renewing it may not always
    be automatic, especially as a person ages. The
    older a person gets, the more likely life
    insurance companies are to add clauses to the
    policy, limit coverage, or increase premiums.
  •  
  • Con The biggest drawback to term life insurance
    is that it usually provides limited coverage.
    This form of coverage can be limited to death
    benefits only in certain circumstances.
  •  
  • Con It doesnt accrue funds. These term
    insurance plans offer no dividends to the keeper
    and cant be cashed out because they dont
    actually accrue any real cash because the person
    usually outlives the term of the contract.
  •  

7
  • Con Its taxable. Other forms of life insurance
    have considerably more protection from taxes,
    whereas term insurance is taxable right from the
    get-go. This means that every dollar they pay
    into the plan ends up being reduced a little come
    tax time.
  •  
  • Overall the benefits to term insurance are that
    people who simply need to take care of their
    family, just-in-case, can get this insurance as a
    basic emergency fund should anything happen to
    them, but thats about the limits of what it
    does.

8
Who Should Get Whole Life Insurance?
  • If you are one of many who have decided to get a
    permanent life insurance plan, then you may have
    also realized that its actually an umbrella term
    that covers a few different life insurance plans.
    So, deciding between whole life, variable, and
    universal life insurance can be a bit tricky. For
    those looking at whole life insurance, here are a
    few advantages and disadvantages of it
  •  
  • Keep in mind that whole life insurance is a form
    of coverage that covers the person from the time
    that they get it to the day that they pass on.
    Its also one that usually has a locked-in
    premium that stays the same as the years pass.

9
  • One pro to whole life insurance is that it has
    the most guarantees of permanent life insurance,
    making it the stable choice for those who want a
    concrete, dependable plan to rely on. It also has
    more of the nature of an insurance plan that
    doesnt require people to check in on it
    regularly. You simply make your payments and are
    covered.
  •  
  • The other pro is that, unlike term insurance,
    this is a permanent life insurance plan that
    covers people throughout their entire lives and
    never expires unless the owner of the plan stops
    making payments, of course!
  •  
  • It also has a guaranteed death benefit and that
    benefit only grows as you get older, meaning that
    people will get more out of this policy the
    longer they have it.

10
  • Whole Life Insurance also can be used for
    dividends. This means that, if a person needs the
    money, they can cash out all or part it. This is
    better than term insurance in that the cancelling
    of term insurance usually results in no
    cashback. 
  • This form of insurance also includes additional
    living benefits that people usually dont get
    through other forms of insurance. Whats usually
    included is an accelerated death clause which
    allows the full payment if the owner is diagnosed
    with a terminal illness.
  • Whole Life Insurance also includes benefits if a
    person is diagnosed with a chronic illness or
    requires long-term care.
  • One Con is that, because it is a policy for life
    and not according to a term, the premiums are
    usually higher, but so are the payouts. The
    premiums will increase as people get older,
    however.

11
  • The other drawback is that people will find that
    owning a whole life insurance policy is not
    unlike having a mortgage in the first few years
    Fees and premiums are high and the benefits are
    few early on. This does improve considerably
    after the first five years, though, as whole life
    insurance premiums are front-loaded.
  •  
  • There are also limits to contribution limits.
    Other plans allow for a person to contribute more
    than they need to create a bigger value to their
    policy, where is this one is set and cant be
    increased beyond a maximum value.
  •  
  • Overall, there are positives and negatives to
    this program, but for those looking for a
    rock-solid, dependable plan that they can pay
    into and forget about, this is it!

12
Why should someone get Universal Life insurance?
  • Among all the types of life insurance out there,
    everyone eventually has to settle on one that
    they know they will be happy with for the next
    few years or even the rest of their lives. So,
    the question for many becomes is universal life
    insurance the right choice for me? Here are some
    of the pros and cons of universal life insurance
  •  
  • First, remember that universal life insurance is
    a form of coverage that allows a person to
    control how much of their money goes into
    benefits and how much goes into a cash portion
    that acts as a kind of savings account that a
    person can access at any time.

13
  • Pro The biggest advantage to having universal
    life insurance is the level to which a person has
    control over it, permitting a great deal of
    investment and the ability to grow those premiums
    into a healthy little nest egg.
  •  
  • Pro It permits a person to have extra cash on
    hand, if they need it. With the cash component of
    the coverage accessible to the owner of the
    policy, they are able to use it for a down
    payment on a house or anything else they like.

14
  • Pro It usually has a guaranteed minimum death
    benefit. That is to say that, even if a person
    doesnt wisely use some of the money in the plan,
    there is usually a point where they cant spend
    anymore, because of the minimum guaranteed
    benefit. This acts like a kind of a safety net
    for those adventurous investors.
  •  
  • Pro Premiums are flexible. This is great for
    people who need an insurance policy that can fit
    the needs of a fluctuating budget. For the good
    times, one can pay higher premiums than they need
    to and they can even pay lower premiums when
    their budgets are tight. For those lean times,
    they are also permitted to skip the occasional
    one.

15
  • Con The ability to tinker with this form of
    insurance can also be its Achilles Heel if left
    under the purview of those who might not make
    wise decisions. One could potentially find the
    insurance claim reduced all the way down to its
    barebones in a short period of time.
  •  
  • Con The cash access component to universal life
    coverage can also have some negative
    repercussions if its not handled well. A
    universal life insurance policy, if treated too
    much like a savings account can have its owner
    find that its not worth very much years later if
    theyre constantly borrowing from it.
  •  
  • Con There is some risk involved. For those who
    prefer to have something that cant be altered
    and is one hundred percent guaranteed, this is
    probably not the plan for them.

16
  • Con Meeting the basics really only meets the
    minimums for the premiums which means that if the
    policy is never given more than the most basic
    payments, then it never has the chance to accrue
    any major growth in cash value.
  •  
  • Overall, universal life insurance is a good bet
    for those who like control over their plan and
    tend to be risk-takers. Those who want stability
    in their plan should probably look for something
    else.

17
Why Do People Get Permanent Life Insurance?
  • There are many people out there who have already
    gotten insurance, but there are many more who are
    questioning whether or not to switch to a
    different policy or theyre simply looking to get
    insurance for the first time. The only problem
    they tend to have is that they dont know what
    the different types of insurance are or which one
    is the best for them. Here are the different
    types and why permanent life insurance is usually
    the most popular

18
Term Life Insurance
  • Term Life Insurance This is your sort of basic
    coverage plan that is also the least costly.
    Virtually every insurance company offers this
    plan because its terms vary from five to
    twenty-five years, but the most popular plan by
    far is the annual plan.
  •  
  • The annual plan allows for a yearly renewal with
    little in the way of obligations to the company.
    This is also what makes it the cheapest, but its
    almost always for a set amount and usually only
    in case of untimely death.

19
Permanent Life Insurance
  • Permanent Life Insurance This is actually more
    of an umbrella term to cover what is an insurance
    policy that will cover a person from the time
    they get it to the time they die, and yes it
    doesnt matter how long they live, theyll still
    receive it!
  •  
  • This is the insurance that people usually swear
    by because it never expires. The only real
    drawback is that it can involve high premiums,
    depending on the coverage. It is the worry-free
    choice for most, though.

20
  • There are three types of Permanent Life
    Insurance
  •  
  • Whole Life Insurance This is one of the more
    common forms of permanent life insurance. It
    gives a bit more peace of mind in that the
    premium is locked in from the moment the coverage
    starts. People who get life insurance early
    benefit the most form Whole Life Insurance as the
    premium is likely to be lower when they get it at
    a young age.
  •  
  • The great thing about this plan is that the
    premium doesnt change, so a person can count on
    the same payment every month. The only negative
    is that because the premium never changes,
    neither does the amount of coverage. This means
    that even with inflation a hundred-thousand-dollar
    policy will still be a hundred-thousand-dollar
    policy twenty or fifty years later.

21
  • Variable Life Insurance This policy allows for
    a little more leeway on the investors part.
    There is always a guaranteed minimum amount that
    the policy will cover, but there are also funds
    that can be invested. This does involve the
    potential for a much higher reward.
  •  
  • The downside is the investments may not yield
    returns or they might even go bust. As a result,
    the amount that the death benefit will pay out
    can fluctuate a great deal.
  •  
  • Universal Life Insurance This coverage allows
    for the person to decide how much they want to go
    into a cash value portion and how much goes into
    the death benefit. This allows a person to
    withdraw part of the amount accrued to pay off
    debts or buy a home, but once its gone, its
    gone!
  •  

22
Why Should I Get A Life Insurance Quote?
  • When people are in their twenties, life insurance
    seems irrelevant in comparison to their youth,
    but as people get older they also get married,
    have kids and settle down. Its also then that
    they realize that something could happen to them,
    but getting a quote on life insurance seems like
    a hassle. Its always on their list of things to
    do, but never quite reaches the top.
  •  
  • Here are a few reasons as to why its time to go
    out and get that life insurance quote today

23
  • To take care of your family. This is the biggest
    reason why everyone gets a life insurance quote
    and its also the best one. People who need life
    insurance are the ones who know that, if
    something happens to them, their spouse and kids
    would experience hardship as a result.
  •  
  • For this reason alone, people get quotes so that
    they can ensure that their family is taken care
    of and it gives peace of mind.
  •  
  • To compare pricing. If a person is looking at
    getting life insurance, then they need to know to
    avoid impulsiveness. Just going out and buying
    any insurance policy can result in deep
    dissatisfaction later on. Going out and getting a
    few different quotes is the wisest thing to do
    before taking the next step towards getting life
    insurance.

24
  • To compare policies. Between term and life
    insurance policies, there are at least a dozen
    different forms of life insurance out there and
    the premiums and fees on each differs greatly.
    So, even before deciding on the best policy,
    knowing the cost might just eliminate a few
    simply because theyre out of ones budget.
  •  
  • To have coverage in case of long-term disability.
    It isnt just bereavement that a person has to
    worry about in life. There are also situations
    where the breadwinner of the family might find
    themselves diagnosed with a chronic illness that
    will prevent them from working. Accidents can
    also result in long-term disability and there are
    insurance policies that can cover people should
    this happen. Knowing the cost of this kind of
    coverage is covered in a quote.

25
  • To know how much it costs to have lifetime
    coverage. One can get term insurance and one can
    get permanent life insurance. Term insurance is
    cheaper, but it does, inevitably expire.
    Permanent insurance will cover a person to the
    day they die, but it is also more expensive.
    Knowing the difference in the price can easily be
    discovered by requesting a quote.
  •  
  • To get an understanding of the different types of
    policies. A quote is more than just a number on a
    piece of paper. A full quote on the different
    policies that an insurance company has also
    provides information on what each policy covers
    and doesnt cover. It also shows people what
    those prices will be like in one year or ten, not
    to mention list any fees that will be charged.
  •  
  • Its for these reasons that a quick call to a few
    insurance companies really is worth it to know
    not just what a policy costs, but what it can do
    for you!

26
  • Here is morehttps//lifeinsurancedirect.ca/perm
    anent-life-insurance/
  • https//lifeinsurancedirect.ca/whole-life-insuranc
    e/
  • https//lifeinsurancedirect.ca/term-life-insurance
    /
  • https//lifeinsurancedirect.ca/universal-life-insu
    rance/
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