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Advantages and disadvantages of term insurance

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Advantages
  • During the early years of a term policy, the premium will usually be significantly lower than for cash value insurance.
  • It's simple to understand.
  • It may be purchased to meet a specific financial obligation, such as repayment of a loan.
  • Many term policies can be converted to cash value life insurance if your insurance needs change.
Disadvantages
  • Term insurance provides coverage only for a limited period of time, although some term policies can be renewed indefinitely.
  • Premium rates are guaranteed only until the end of the term. Depending on the policy, premiums may be level for a period of 1, 5, 10, 15, 20, 25, or 30 years and then cease without any renewal option, or offer continual renewals at a higher premium rate.
  • Deteriorating health can trap you in a policy with rapidly increasing premiums.
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