One of the two most commonly opted life insurance policies in India; term life insurance is where you are insured for life for a specific period of time. Once the term expires, you will have to either renew the policy or purchase a new policy. This type of life insurance is generally most advantageous for young people with no health complications. As a matter of fact this is generally the most commonly opted for life insurance. Here are some of the disadvantages and advantages of going for term life insurance:
Disadvantages of term life insurance
- Short term policy: The disadvantage of term life insurance is that it provides cover only for a short period of time. Hence, on completion of the term the insurance policy lapses unless the person renews it in time. And even on renewal the terms of the insurance plan will not be the same and will be adjusted according to the present conditions of the person. But since the person will be older, the cost of the insurance will increase and more so, if he has developed any sort of medical complication during the previous term. Hence, term life insurance can be advantageous for a short time but becomes costly and inconvenient in the long run.
- No money back provision: Comparing term life insurance with whole life insurance the basic drawback that most people see is the money invested for insurance. Though the person is covered during the term; once the policy matures the money spent on the life insurance isn’t paid back even when no claim is made. But in case of whole life insurance; since the life insurance is paid for whole life, there is provision made to invest part of the money and pay the returns to the insured. This option isn’t available with term life insurance.
Advantages of term life insurance
- Low cost: The basic advantage of term life insurance is its low costs. The premium you need to pay for term life insurance is the lowest when compared to the other types of life insurance. This is why term life insurance is the most preferred among all the different types of life insurance policies and hence it can be afforded by all types of people from all walks of life. Hence, with term life insurance you can enjoy the assurance that your family is provided for, in case of any mishap at affordable premiums.
- Investing as per your desire: In case of whole life insurance though a part of the premium paid is invested, the investments are made by the insurance firm or their consultant. But with term life insurance due to the low cost of premium as compared to whole life insurance, the money saved can be invested as per your wish.
Thus, these are some of the advantages and disadvantages of term life insurance. In conclusion, whatever the type you prefer life insurance is essential for every family.