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Advantages/Disadvantages of Term Insurance
Term insurance is ideal for families
where protection is needed, but a minimum outlay of
funds is necessary. Term also works well as a supplement
to cash value insurance. Another common purpose of term
insurance is to purchase it as protection against debts
such as mortgages, auto loans or education loans.
On the negative side, term insurance
provides only temporary protection, and there may come
a time when an insured has no protection after the term
policy ends.
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Benefits of Term Insurance:
Needs change over time and
flexible term insurance can mirror those changes. It acts
as temporary insurance to meet your temporary needs. The necessity
to provide protection for a family starts out high, but generally
diminishes over time as children reach maturity and savings
plans accumulate.
As the name reflects, term insurance provides
coverage for a specific period of time, a term. At the end
of the period, most policies may be renewed at an increased
premium rate for the next period.
More buying power:
Term insurance is designed to offer the largest amount of
insurance protection at a relatively low cost. Because its
cost is so reasonable, term is usually recommended for young
families. It affords buying power for a larger amount of protection
than permanent forms of insurance.
Not a compulsory form of savings:
Unlike whole life Insurance, term has no forced
savings element. It provides pure insurance protection, having
no mission other than to pay a death benefit to the beneficiary.
Invest elsewhere:
A whole life insurance policy turns out to
be a compulsory form of savings rather than a plan of insurance.
With most having less than a 4% rate of return over time,
the savings results are rather dismal. Smarter to buy term
insurance and invest the difference in premiums in a tax-favored,
high return, retirement plan.
There are some instances where permanent forms
of insurance are needed when settling ultimate responsibilities,
such as state tax liquidity. But if you have large and
temporary needs for life insurance coverage, term insurance
is the better choice. Pure insurance protection can afford
you more than adequate coverage to replace lost income for
the benefit of your family.
Please call us. We can quote
your low rates over the phone and get your term insurance
needs satisfied. We can help.
Van Albanese, CLU, ChFC
van@moneyins.com
877-341-3342
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