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You are in your adulthood era and contemplating between term life insurance or whole life insurance. Don’t worry, in this article, we will explain to you in simpler terms what term life insurance is and whether you should get it.
What is Term Life Insurance?
Term life is a type of life insurance that you can get that offers a lump sum payout in the event of death or total permanent disability. However, term life insurance will only cover your death and total permanent disability if such an event occurred during the period of coverage.
This life insurance only covers a specific period depending on the coverage chosen by you. This could be as short as five years or as long as 30 years, and it depends on you entirely. This means that, in the event of death or total permanent disability after your policy has ended, no payouts will be available for your beneficiary.
Payouts occur only when the covered events happen during the insurance coverage period. For example, Ali, a 38-year-old Engineer chose to take term life insurance for a coverage of 10 years. He has nominated his wife to be his beneficiary under this insurance. Seven years later, Ali passed away. Since he passed away during his insurance coverage period, his wife will receive an insurance payout upon his death.
What Are The Advantages of Term Life Insurance?
If you are thinking of getting term life insurance, here are some of the benefits that you can consider:
1. Lower, Cheaper Premium
Term life typically has lower premiums compared to whole life insurance. The cost of term life policy are determined by the coverage duration of the insurance term you choose.
2. Change of Mind
Should you decide to reconsider, you have the option to convert your term life policy to whole life insurance. You can explore this possibility by consulting your insurance agent for guidance on the process.
3. Customizable Plan
You have the flexibility to determine the duration of your coverage based on your financial capacity. Additionally, you can decide whether to renew your policy at its expiration, considering your affordability at that particular time.
4. Add-on Riders
You can also add on other riders on your term life policy and some of your options include:
- Accidental death and dismemberment;
- Critical illness;
- Accelerated death benefit;
- TPD premium waiver;
- Family benefit.
5. No Need for A Medical Examination
You don’t even need to go through the hassle of getting your medical examination done if you get term life insurance.
What Are The Disadvantages of Term Life Insurance?
When comparing term life to other types of life insurance, certain drawbacks may become apparent. Let’s explore some of the disadvantages below:
1. No Payout When Policy Ends
Upon the conclusion of a term life policy, there is no payout if death or total permanent disability has not occurred during the coverage period. Payout will only occur when death or total disability occurs during the coverage period.
2. No Cash Value
Term life holds no cash value, as payouts only occur if the covered event happens within the coverage period. When the coverage period ends, you will not get all the premiums you have previously paid, returned to you.
3. Potential for Higher Renewal Premiums
Unlike whole life insurance where the premium is fixed for life, the premium to be paid for term life insurance upon renewal is not fixed. Term life premiums can be increased as you age and this can be a disadvantage if you are not prepared to pay for the price increase.
4. Coverage Limited by Time
Term life policy only covers you within that specific time or period that you chose. If the event of death or total disability happens after the policy ends, you will not be covered for it.
How is Term Life Insurance Different from Whole Life Insurance?
To put it in simpler terms, both term life insurance and whole life insurance cover the same thing. Both offers payouts in the event of death or total permanent disability.
Term life insurance provides coverage for a set period. Meanwhile, whole life insurance extends coverage throughout your entire life, albeit with higher premiums.
Whole life insurance also assures a guaranteed payout to the beneficiary, adding a financial benefit beyond the coverage period.
Get Your Term Life Insurance Today for Extra Protection
Choosing the perfect life insurance coverage for you shouldn’t be such a daunting process. There is much information available online for you to be able to do your research on and make comparisons before choosing the best life insurance.
Head over to qoala.my now to make easy comparisons of insurance that can be bought online! Qoala is the biggest platform in Malaysia that compares a wide range of insurance products. It is a trusted and secure platform that provides speedy and hassle-free services.
