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Pros and Cons of Term Life Insurance

Term life insurance is recommended by many consumer advocates as the least expensive type of insurance.  However, it’s not quite as easy as that – read about the pros and cons of term life insurance.

Term life insurance is life insurance needed for temporary or short term life insurance needs.  In the insurance world, ‘short term’ could mean 10, 20 or even 30 years.  What it does not mean, despite the name, that it’s life insurance intended for you to keep until you die. Term life insurance is suitable primarily if you expect to cancel the insurance before you die.

With an understanding of the insurance, lets look at the pros and cons of term life insurance.

Cons:

  • Not lifetime coverage. Term life insurance automatically expires at older ages.
  • Premiums increase over time. Different policies have different durations between durations, but the cheaper the coverage, generally the shorter the duration before premiums increase.
  • At the time of premium increase, premiums will increase 7 to 10 times. To reduce the increase, you would need to purchase a new policy which would entail qualifying via a new medical exam at that time as well.
  • No investment options.
  • No opportunity to increase coverage amount in the future without taking a new medical exam.

Pros:

  • Pure life insurance, no complications
  • Least expensive way to purchase life insurance (initially). Allows for large amounts at affordable premiums.
  • Premiums are guaranteed level for the initial duration or ‘term’. Terms can be as long as 30 years.
  • Ability to exchange or ‘convert’ to permanent life insurance, without taking a medical exam.
  • You can create inexpensive decreasing future amounts of coverage by layering different term structures.
  • Very competitive premiums as life insurance companies often target their premiums towards price sensitive consumers.

The term life insurance marketplace is extremely competitive in terms of premiums.  Make sure you deal with a life insurance broker who has compared prices from a large range of companies.  You can speak to an experienced life insurance broker and get a quote over the phone right now, just call us toll free at 1-877-344-4011 or email info@lifeinsurancecanada.com.

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