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The Pros and Cons of Term Life Insurance Policies


Term life insurance policies are straightforward policies that are contracted for a set period of time. Many financial experts, such as Dave Ramsey, consider these policies the best type of insurance, while others consider them to be poor value. Here's a look at both sides.

The Pros of Term Life Insurance

These are generally the most inexpensive policies among the many types of policies on the market. They also stay at a fixed rate throughout the contract period. Getting this insurance at a young age ensures a long period with a low monthly payment for the policy. If the contract is for 20 years, the specific insurance amount pays out at the time of the insured's death. There are no waiting periods for this type of insurance, and there are no other fees due. The simplicity and low cost of these policies has made them one of the best deals among insurance products.

The Cons of Term Life Insurance

The major con to buying term life insurance is that it can be difficult or impossible to get if you are in poor health. Once the contract period ends, it may be difficult to renew the policy if there have been health problems during the original contract period. Some people find that they become uninsurable during the contract period and are left after the contract with no insurance at all. There are, however, some policies that have guaranteed renewability until a specific age. 

There may be a high monthly payment due if the insured party smokes, has serious health problems or is obese. These factors can make it difficult to get these policies at all for some people, particularly if they are also middle aged or older. There may be a health exam to determine the applicant's overall level of health.

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