Many folks pick up a life insurance policy so they can guarantee a degree of financial stability for their family long after they have passed.  Beyond this, life insurance can also be used as a means to settle any outstanding debt at the time of one’s death.

Now, given the fact that there are many forms and restrictions to life insurance, it’s not uncommon for people to question its worth.  So, to help you decide we’ve prepared a guide detailing the pros and cons of life insurance as well as various resources on the matter.

The Benefits and Drawbacks of Life Insurance

Life insurance can be divided into two classifications with differing degrees of coverage and compensation.  These classifications consist of term life insurance and permanent life insurance, with permanent policies offering far more coverage.

The Pros of Life Insurance

As the name implies, permanent life insurance protects the policyholder indefinitely until the time of their passing.  This means you won’t have to worry about renewing your policy or watching out for expiration dates as the policy will only cease when the holder is gone.

Aside from indefinite coverage, permanent life insurance policies can also function as collateral for a loan.  This means you can borrow the full cash value of your policy to cover large expenses such as property purchases and school tuition.

Term insurance also possesses unique benefits with the most obvious one being flexibility.  Instead of paying a premium your whole life, you can choose to pay a premium for a set number of years with term life insurance.

One perk offered by both forms of life insurance is the prospect of accelerated benefits due to developed health conditions.  These options allow you to receive a portion of your policy’s death benefit in advance, thereby allowing you to pay off medical expenses and the like.

The Cons of Life Insurance

The biggest downside to life insurance policies, in general, is the costs involved in maintaining an active policy.  Term insurance policies usually cost between $300 and $500 annually, while permanent policies can go as high as $5,500 per year.

These costs can be difficult to handle, especially if you’re on a budget or trying to save money.  In addition, those with pre-existing health conditions will almost always have a higher annual premium as they present a greater liability to the insurance companies.

Last but not least, since term insurance policies can expire after a certain date, they are liable to expire without ever paying out.  It is for this reason that many folks convert their term policies to provide permanent coverage.

From our point of view, as long as you have the means to pay for a life insurance policy, we believe it can be a worthy investment.  The coverage and compensation provided by such policies can be extremely helpful to your loved ones if you ever pass away.

Now that we’ve covered the good and the bad aspects of life insurance, we hope you’ll have an easier time deciding on whether or not to purchase a policy.