Trying to figure out if you need life insurance can be super complicated.
But the truth is:
That there are probably more good reasons to have life insurance than there are reasons not to have it.
Beyond cost, what downside could insuring your family’s financial security pose?
In this guide, I will walk you through the advantages and disadvantages of life insurance in plain English—no complicated insurance lingo.
The Advantages of Buying Life Insurance
Over half of all Americans (54%) have a life insurance policy as of 2021, and at least fifty percent of adults look up life insurance information online.
It’s clearly a hot topic, so let’s talk about the general advantages of life insurance:
However, the exact advantages of life insurance vary depending on the kind of policy.
We’ll be focusing on the advantages of the two most common policies: term life insurance and whole life insurance (also known as permanent life insurance).
Advantages of Term Life Insurance
Advantages of Whole Life Insurance
THE SIMPLY INSURANCE WAY
Life Insurance made easy.
Agents not required.
Get quotes and sign up online without talking to an agent. But, we are here if you need us.
Unbiased, expert advice.
Get unbiased insurance education from licensed experts and also avoid dodgy sales calls.
Coverage in minutes.
You can get life insurance coverage within minutes of getting your quotes and applying.
The Disadvantages of Buying Life Insurance
The disadvantages of buying life insurance may be less obvious, but they still exist. Here are some of the most common disadvantages:
The disadvantages of life insurance also vary depending on the kind of policy you purchase.
Disadvantages of Term Life Insurance
Disadvantages of Whole Life Insurance
In general, you’ll find many self-proclaimed finance experts online who criticize whole life insurance. Why? It mainly has to do with one thing—cost.
Whole life insurance generally offers more expensive initial premiums than the short-term term life insurance, even though the amount of the death benefit may be exactly the same in both policies.
But as we stated before, the cost of the premium stays the same over time, so it’s really an advantage to buy whole life insurance in the long run.
How to Get the Best Out of Your Life Insurance
If you’ve stuck with us this far, you might be wondering how to maximize the advantages of a life insurance policy.
Start Early
Whether you opt for term or whole life insurance, your premium will be at its lowest when you're young.
Average insurance premiums tend to increase between 5 and 12 percent per year of age, starting around age 40.
Form Healthy Habits
Lifestyle habits do affect your premium in most cases. Things like smoking or a high BMI can result in a significant increase—but the good news is that you can change these factors.
You'll not only pay less for life insurance but also potentially increase your lifespan.
LIFE INSURANCE WHERE YOU LIVE
Life insurance by state.
With a Life Insurance policy you can take care of your family the right way.
Should anything happen to you, you'll want to leave your loved ones a financial nest egg for their wellbeing.
Click on your state to find out more.
Review Your Policy Every Three Years
While you can review your policy and compare quotes as often as you like, every 3 to 5 years is a good guideline, or after any major life event, such as a marriage or the birth of a child.
You change—so do your life insurance needs.
Pay Annually
If you can, pay your premium annually rather than monthly. Many insurance companies will offer a discount, sometimes as much as 10 percent, for annual payments.
Setting up auto-pay also sometimes comes with modest savings.
Optimize Your Policy with Riders
Life insurance riders are an excellent way to customize your plan to your specific needs, maximizing the benefits to you personally.
You can add riders for everything from waiver of premiums in the event of disability to the ability to draw your benefits during your lifetime. We particularly recommend that second one.
An accelerated death benefit rider allows you to access your insurance payout if you become terminally ill and need funds to cover your end-of-life expenses.
Alternately, a chronic illness rider allows you to draw from your policy if you need funds to cover in-home care.
THE SIMPLY INSURANCE WAY
Life Insurance made easy.
Agents not required.
Get quotes and sign up online without talking to an agent. But, we are here if you need us.
Unbiased, expert advice.
Get unbiased insurance education from licensed experts and also avoid dodgy sales calls.
Coverage in minutes.
You can get life insurance coverage within minutes of getting your quotes and applying.
Taking Action
As you can see there are plenty of advantages to having life insurance and honestly, I believe everyone needs to get life insurance even if it's a small policy.
Also, if you want to get the most out of your insurance, you want to make sure you get the best rate possible and we make it simple to compare quotes from the best life insurance companies fast.
If you need life insurance, you can get immediate quotes and coverage by clicking here or on any of the above buttons.