Reasons to avoid term life insurance

Reasons to avoid term life insurance

November 17, 2016
term life insurance
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Term life insurance has become extremely popular these days, primarily because it’s inexpensive and uncomplicated. Those who buy it only look for temporary protection (until their children grow up and become independent, for example), and cancel the coverage afterwards. They do this because they hope to accumulate enough capital so that they can insure themselves against premature death. If things go as planned, then getting term life insurance was definitely the best option, as they end up saving a lot of money. But there’s always a chance that things don’t go as planned.

If you’re unlucky, term life insurance can turn out to be the worst possible choice. Here are some reasons why you may want to avoid it.

1. You believe you will continue to need life insurance after the term

Young people who are just starting a family tend to only look to provide for their children, usually until those kids get through college. That’s why they consider 25-year term policies to be sufficient for their needs. But sometimes that’s not enough. Here are some situations:

  • In case you have a special needs child;
  • If your spouse leaves the workforce and is unable to earn an income;
  • If you start a business and life insurance is required to protect your family’s interest in the business;
  • In case you expect to carry debt or a mortgage into the later stages of your life.

In such situations, permanent life insurance would definitely be the better option.

2. You have a complicated family medical history

Some health conditions can prevent you from obtaining life insurance. If your family has a history with certain medical conditions, such as diabetes, it’s likely that you will also develop them.

Term life insurance only protects you for a certain period of time. Once it ends, you will need to get a new one. And, if you develop a health condition, you might not be able to get coverage anymore.

3. Permanent life insurance also comes with a few benefits

Permanent life insurance plans come with several tax benefits. These include tax-deferred cash value growth, tax-free access to cash values and tax-free death benefits.

Bottom line

Getting life insurance is serious business. Before you go out shopping for it, you need to take a minute and figure out exactly what you need. Term life insurance might be exactly what you need or it may not. It’s important that you have options to choose from. You can choose the right one for you.

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