Pros And Cons Of Term Life Insurance

Your life is precious. Your family members are heavily dependent on you, not just emotionally, but financially too. But if something happens to you, who will take care of their needs? If this question comes up in your mind, your saviour is a term life insurance. A term life insurance is a life insurance policy for a specified term. If something was to happen to you during the term, the sum assured will be offered to your beneficiary or next of kin. This death benefit received by the beneficiary can be helpful to cover the future upcoming financial needs. This is one of the best financial protections that you can offer to your family. But before you buy your term insurance, here are the pros and cons of it so that you can make an informed decision:


  • Simplicity: Unlike other insurance policies, term life insurance is extremely simple to understand. You buy a policy for a definite period and pay your yearly premium. In the event of the policyholder’s death during the term of the policy, the insurance company will give the sum assured to the family. This is known as the death benefit. There are simply three things you need to decide before buying a policy – the sum assured, the period and the insurance company. To choose the right insurance company, you can make an easy term life insurance comparison online. Through this, you can easily know the advantages and disadvantages of each company and choose according to your requirements.
  • Inexpensive: Due to the limited term of this insurance policy, the premiums are much lower than other types of life insurance policies. Insured can avail huge life coverage at a cheaper premium cost, making it one of the most affordable options for everyone. However, it is best if you buy a term insurance policy as young as possible. Since your chances at mortality increase with every passing year, the yearly premiums also rise.
  • Flexibility: Not everybody needs a life insurance policy spanning their entire lifetime. If you are a small family with a child, you only need an insurance policy until your child is older and financially independent. If you have taken a long-term loan such as a home loan, you can only take life insurance up till the tenure of the loan. So that if you expire, the burden of the loan does not fall on your family’s shoulders. For such a fixed term, you do not need a full-life insurance policy. In such a case, a term life insurance policy is best. You can stop paying premiums and renewing them in case you don’t have any more liabilities. For example, you can stop paying premiums after you retire.
  • Tax Benefits: You can avail some great tax benefits by showing your term life insurance plan under Section 80C of the Income Tax Act.


  • Limited Duration: While this is a benefit, but it can also act as a disadvantage. If after 20 or 30 years, your policy matures, you might not be able to buy a new policy. Your age will make the premiums too high to invest in.
  • No Maturity Benefit: You only receive death benefit with term life insurance policies. Which means that the sum assured will only be offered to your family if you expire during the period. There is no survival benefit either. Which means that if you survive the term of the policy, you or your family do not get anything from the insurance company. However, you can choose the option of Term Return of Investment. Through this, if you survive, the insurance company will return all the money you have paid them as premium over the years. So, you won’t be at a loss.
  • No Wealth Creation: While life insurance policies are also looked at as savings, term life insurance policies are not so. They do not offer any profit plans. You do not get a surrender value or a loan facility on term life insurance.
  • Increasing Premiums: There is a rise in the number of premiums you pay with each passing year. This is because the chances of your mortality increase and so does the liability of the insurance company.

Term life insurance plans are a great way to ensure a stable life for your family under unforeseen circumstances. So, its best to be prepared.


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