Term Insurance Advantages and Disadvantages

Uncertainty of life can be a matter of concern when you are the primary breadwinner of the family. It is very important to have a financial plan for the future so that your family is secure even when you are not around. A crucial part of your financial planning is to purchase a good term insurance plan. Let us check all the advantages and disadvantages of Term life insurance plans in detail.

What is Term Insurance?

Term life insurance is a great way to ensure the financial security of your family in case an unforeseen event occurs. In case of your untimely demise during the policy tenure, a death benefit shall be provided to your family which can help them fulfil their daily expenses and pursue their dreams even in your absence. 

Advantages Of Term Insurance

Below mentioned are the advantages of purchasing a term insurance plan:

• Inexpensive

  Term insurance plans are affordable solutions that provide substantial coverage. Term insurance plans have economic premiums that do not affect your pocket. Premiums for term insurance plans are inexpensive compared to other types of life insurance policies. Term insurance plans give you a high sum assured at affordable premiums as compared to other insurance plans. 

• Financial Security

  Term insurance plans are popularly known as ‘Risk Protection’ or ‘Pure Protection’ plans as these plans provide financial security to your family in case of your unpredictable demise during the policy term. A death benefit is provided to your family in case of your untimely demise during the policy tenure. The death benefit shall act as a shield and help your family maintain a decent lifestyle in your absence. 

• Flexible and Adjustable

  Several term insurance plans offer the option to switch from a term plan to an endowment plan for the same coverage amount with an increase in the premiums. You also get the option to renew your term insurance policy for another time period. You can also enhance the coverage of your insurance plan by opting for additional riders.

Limitation of Term Insurance

Below mentioned are some drawbacks of term life insurance plans:

• Increase in Premiums

  A significant drawback of term insurance plans is that premiums for term insurance plans increase as you grow older, that is why it is advised to purchase a term insurance plan when you are young. 

• No Investment Component

  Term insurance plans provide financial protection in case of an unforeseen demise of the life assured. This plan does not have an investment component like retirement, child life or ULIPs. 

To Conclude

Term insurance plans provide much-needed financial security in unprecedented times. When you choose to invest in a term insurance plan, you can be at peace knowing that your family will not struggle financially to maintain a decent lifestyle in case you are not around. Term insurance can act as a shield for your family in difficult circumstances. 

Also read:

Am I Eligible To Purchase A Term Insurance Plan?

How Can Increasing Term Insurance Be Beneficial?

Disclaimer: This article is issued in the general public interest and is meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.