Taking into consideration the many benefits a term life insurance plan has, it also has its cons – the bad side. Knowing about these cons will contribute to your planning on purchasing this kind of plan. It is always good to attain knowledge about such information beforehand.
The Cons of Term Life Insurance:
1- Term life insurance coverage expires.
When you take out your policy you may well think it is for a hugely long term. Lets be honest when you are in your 20′s it can seem like 30 years is a lifetime. Just ask your parents, 30 years can seem like the blink of an eye and you are suddenly without life insurance coverage.
2- No Refunds
If you outlive the selected insurance term or cancel it halfway, there will be no refund. No matter how much you have paid in it is gone.Just because you don’t use it you can not expect any kind of rebate or a discount on your next policy.
3-Amount
Deciding the amount you want the policy to cover you for can be one of the most difficult decisions, you want it to be enough to help your family in the future without the monthly payments being so much that they affect your family budget now.
4-Inflation
Not every policy has a clause in for inflation. Your coverage of $100k may seem like a fortune now, but who knows what that will buy you in 30 years, will it be enough to pay of the kids college loans? To get round inflation you can buy extra policies, so when you are 10 years into your 30 year policy you could take out another policy with a 20 year term. That way they will both finish at the same time but you will get two payouts.
Life insurance is a good thing, especially for anyone with a family, the question as to whether term life insurance is a better buy for you rather than a normal (non fixed term) policy is one only you can answer. Do not let the negative points we have mentioned here stop you from buying any insurance at all.