There are too many times where people fight over which is best, term life insurance or whole life insurance. It’s been long debated, so today we’ll talk about a question from the other point of view, “Is Term Life Insurance Worth It?”
The quick answer: sometimes not.
Like any other type of insurance product, there are situations where it may be appropriate and situations where it really isn’t.
To answer the question “Is Term Life Insurance Worth It?”, we have to know its purpose, in what situations its applicable, and if it’s even an option for some. Keep reading for details on whether or not term life insurance is really worth it or not. There is also decreasing term life insurance available if that is something you are interested in. If you are concerned because you have health issues such someone looking for life insurance with kidney disease and you’re wondering if you can qualify for affordable high risk life insurance, we can certainly answer questions and help you obtain the coverage you deserve. So whether you’re looking for a small amount of coverage or you need million dollar life insurance rates; call us today.
Is Term Life Insurance Worth It?
Debate after debate has been sung from the hills about whether term or whole life is the best option. We’re not going to debate that today. In fact, we’re going to discuss both sides of the question “Is Term Life Insurance Worth It?”, because there are two sides.
In personal finance, one rule of thumb which has since become a cliche talks about a penny saved being a penny earned. For the most whole-hearted and frugal, spending even a single extra dollar on anything which won’t either make you money or save you money might seem like a total waste.
Those who are most against term life insurance from strictly the product standpoint argue it is, quite literally, gambling. Like all insurance products, you either use it or lose it. So in order to win, you have to die.
Obviously, it’s not quite that simple, but a fact of the matter when it comes to life insurance is that only 1% of term policies ever pay out.
Only 1 % of term policies ever pay out.
It’s true. The other 99% of all policies never pay a dollar to the payer or beneficiary. So what happens to those policies? They are:
If you look at it from a raw data side, any person who buys term life insurance has a 99% chance of losing their premiums.
The other side of the fence would argue the grass is much greener. They would argue that term life insurance is worth it because it’s the foundation of a financially stable portfolio.
Unlike most other types of insurance, like car , home or health, life insurance is not even required. But not everyone ever uses their car or homeowner’s insurance either, so what does it matter?
Term life insurance, as long as one can qualify for great rates, is one of the cheaper insurance products available. Not only that, it doesn’t replace a tangible product, but rather designates a large sum of cash for whoever needs it most.
Even more, term life insurance magnifies your dollars. Whereas a car insurance plan (which can cost more than life insurance by a long shot) only replaces the current market value of the vehicle lost, life insurance payouts turn pennies into dollars.
Who Is Right?
In short, term life insurance serves one purpose: replacement of human capital.
By nature, because it is insurance, you hope you never have to use it, but it’s safe to have it just in case. You can never replace a human being, but you can soften the blow to those who depend on them by replacing the value of money they would have provided in the years to come.
However, for some, it may not be worth it because the cost could outweigh the potential benefits, especially if one cannot qualify for affordable rates.
If you are curious to have an expert opinion on whether or not you need insurance, give us a call and we’ll give your our honest opinion.