What are the advantages & disadvantages of Term Life?

Question

What are the advantages & disadvantages of Term Life?

Answer 1

+: Lower cost pure protection; good for short term needs, families starting out with limited funds, or short term buy/sell business arrangements

-: Expires after a number of years, and insured will pay higher premium or cancel policy and get a new one, now older, only 1.4% of term policies are paid out because you have to "die to win" -- meaning die before the term is up to get a payout

Answer 2

Term insurance advantages:

- lowest cost

- you can buy a large amount of coverage

- simple to understand

- usually guaranteed rates

Term insurance disadvantages

- when (or if) it renews the price increases quite a bit

- it expires with no value at some point

- If you miss a payment there is no cash reserve to draw from and you could lose your coverage

- not eligible for dividends

- generally not appropriate for estate planning