Term life insurance is intended to assist individuals to safeguard the interests of their loved ones and dependents in the event of an untimely death. It has a guaranteed life benefit payable to the insured’s beneficiaries over a predetermined period. It is usually available to people between the ages of 18 and 50.
Learn more about term life insurance.
However, in this article, we discuss the advantages and disadvantages of this life insurance policy.
Advantages of Term Life Insurance
1. High sum assured at a low premium
One of the key advantages of term insurance is its low cost and affordability. When compared to other types of life insurance plans, a term insurance policy has a lower premium. Also, the rate is reduced the earlier you get it.
2. Payment of sum insured
In the event of the insured’s untimely death, the family members will get the sum promised as a payout. At the start, the policyholder has the option of receiving a lump payment, a monthly or yearly income, a mix of lump sum and income, or an increasing income. This is to assist with financial demands like domestic bills, among other things.
3. Plan for the future
Based on your lifestyle, you may assume that nothing unexpected will happen to you. However, there is always the chance of early death due to external events such as accidents or sickness, which are beyond your control. Purchasing term life insurance helps reduce the financial burden your family may suffer in your absence.
4. Options for death benefit payment
Some term insurance policies allow you to receive a monthly income in addition to the lump sum amount as the death benefit. This way, your family may find it easier to manage routine costs with this monthly income.
5. More adaptable
When deciding the period of your term life insurance, you have various alternatives. Typically, you may get coverage for 1 – 30 years.
6. Ideal for young families
Due to the fact that term life insurance mostly lasts a short period of time and is less expensive, it’s an excellent alternative for young families seeking temporary protection.
7. Tax reduction
With a term life insurance plan, you can claim a deduction from your taxable income. For instance, as a salary earner, you can get a reduction on your PAYE when you have a term life insurance plan-this would also result in an increase in your net salary.
The term life insurance is simple to comprehend. You are insured for the length of the insurance as long as you pay the premium. There are just three major considerations to make:
- how much life insurance coverage do you require,
- how long you want the policy to continue, and
- which insurer do you want to work with?
Disadvantages of Term Life Insurance
1. Purchasing a term plan later in life equals a higher premium
2. Your rates rise as you age. When you acquire term life insurance in your 20s or 30s, it will be cheaper than when you need to renew in your 50s or 60s.
3. There is no survivor benefit for the insured. Death benefits are paid to the beneficiaries of the deceased, and there is no survivor benefit. As a result, the insured who pays the premium cannot participate in the claim processes since they would be dead for the policy to kick in. And if you outlast the term and the policy expires, your beneficiaries do not get the death benefit.
4. Term life insurance is not intended for people who want to save for a specific purpose, such as further education, retirement preparation, or marriage.
Take Out a Life Insurance Policy Today
Now you know the advantages and disadvantages of a term life insurance policy. Are you ready to get started with your own life insurance policy? Here at Leadway Assurance, we offer a pre-priced and affordable Term Life Plan that cost only N10,000 yearly with up to N1,000,000 in benefits. Looking for something else or have questions? Request a callback today.