What is the most important advantage of buying term life insurance rather than whole life insurance the person can get?
Asked by: Ellis Brown | Last update: August 18, 2025Score: 4.4/5 (10 votes)
Why might term insurance be a better option than whole life insurance?
If you only need life insurance for a relatively short period of time (such as while you have minor children to raise), term life may be better because the premiums are more affordable. If you need permanent coverage that lasts your entire life, whole life is likely preferred.
What would be an advantage of purchasing term life insurance?
Term life insurance offers cost-effective coverage for a defined duration. It offers high death benefits at lower premiums compared to permanent policies. Ideal for temporary needs like mortgage protection or income replacement. Policies are customizable with various term lengths and coverage amounts.
What is the main advantage of term insurance?
Term life insurance is a simple, affordable solution for your life insurance needs. It can also be used to supplement your other insurance coverage. Coverage is available for 10- or 20-year terms, is less expensive and more flexible than whole life insurance and can easily be renewed.
What is one benefit of term life insurance over whole life insurance quizlet?
One advantage of term life insurance is the initial premium is lower than for an equivalent amount of whole life insurance. Term life provides the greatest amount of death benefit per dollar of initial cash outlay.
Why Is Term Insurance Better Than Whole Life Insurance?
What is the advantage of term life insurance over whole life insurance?
The pros and cons of term and whole life insurance are clear: Term life insurance is simpler and more affordable but has an expiration date and doesn't include a cash value feature. Whole life insurance is more expensive and complex, but it provides lifelong coverage and builds cash value over time.
Which of the following is a benefit of term life insurance?
Term life insurance provides coverage in case you pass away during the policy term. A term life policy stays in effect for a specific length of time (e.g., 10, 20, 30, or even 40 years). Some families prefer to have coverage during their working years to help replace their income in a worst-case scenario.
What is term insurance best for?
What does term life insurance cover? If you pass away, your beneficiaries will receive a payout to take care of the expenses of their choice. Term life insurance payouts are commonly used to cover funeral costs, childcare, payoff debt, college tuition or everyday expenses should something happen to you.
Why do people use term life insurance?
Term life insurance is a relatively inexpensive way to provide a lump sum to your dependents if something happens to you. It can be a good option if you are young and healthy and support a family. Whole life insurance comes with substantially higher monthly premiums.
Which of the following best describes the term life insurance?
Final answer:
Term life insurance provides coverage for a specific number of years without accumulating cash value. The insured pays premiums during this term, and beneficiaries receive a death benefit if the insured passes away within it.
Do you get money back if you outlive term life insurance?
Can you get your money back after your term life policy expires? Once your policy ends, you can't get back the premiums you paid unless you have a return of premium rider. This optional add-on lets you receive a refund of premiums if you outlive your policy term.
Why is term insurance often better than permanent insurance?
Comparing term vs. permanent life insurance. Term insurance is often a more affordable, low-cost option allowing for a larger death benefit (or coverage) with the lowest premiums. This is because the policies offer little flexibility and expire, meaning it's likely you may not have coverage down the road if you need it ...
What is the survival benefit of term insurance?
Definition: The survival benefit of a life insurance policy pays an amount to the policyholder when the life insured outlives the policy term, and no death claim is filed. This benefit is generally paid at the end of the premium payment term.
What would be considered an advantage of purchasing term life insurance?
Explanation: An advantage of purchasing term life insurance is that the initial premium is lower compared to an equivalent amount of whole life coverage. Term life insurance provides coverage for a specified period, typically 10, 20, or 30 years.
What happens to term life insurance at the end of the term?
If you outlive your term (let's hope this is the case), then typically one of two things happens: The policy will simply end, and you'll no longer owe payments or be covered, or. The insurer might allow you to keep your coverage by converting all or a portion of the policy into permanent life insurance.
Which one is better term or life insurance?
If you are looking for a pure life insurance plan, then a basic term insurance plan is a good option as it offers a sum assured at an affordable premium. However, if you are looking for a more comprehensive cover and/or wealth generation along with protection, then you can look at the range of life insurance plans.
What is the biggest advantage of term life insurance?
Term Life Insurance Pros: It's customizable, specific to your timeline, and usually costs less than whole life insurance. Term Life insurance Cons: If you outlive the term length, your coverage will end and you won't receive any benefits.
Why is term better than whole life?
Term life is often the most affordable life insurance because it's temporary and has no cash value. Whole life premiums are much higher because the coverage typically lasts your lifetime, and the policy grows cash value.
At what point is life insurance not worth it?
When is term life insurance not worth it? Term life insurance probably isn't worth the costs if you don't have any significant debts to pass on to your loved ones or you don't have dependents or a spouse that you'd leave in a bind by passing away.
Can you cash out a term life insurance policy?
While you can't cash out term life insurance, you can sell your policy. Additionally, you may have other options if you want to change your coverage, such as lowering your premium payments or converting to a permanent policy.
What are the disadvantages of term life insurance?
Ans: Term insurance disadvantages include no investment opportunities, lack of assistance while alive, no survival benefit if the policyholder outlives the term, and no cash value accumulation.
What happens if you outlive your term life insurance?
No, with a standard term life insurance policy, you won't be receive anything back if you outlive your life insurance. So, what happens at the end of your term life insurance? Your life insurance will simply expire and you can either take out a new policy or look into other types of financial protection.
What is the main purpose of term life insurance?
Term life insurance offers a death benefit, which is intended to help your beneficiaries replace your income if you pass away. For example, the money can be used to help pay for things like a mortgage, education costs or everyday expenses, such as groceries.
What is term insurance best suited for?
Why choose term insurance plans? Term insurance plans offer financial security for the entire family in case of the unfortunate death of the policyholder. Also, you can get optional coverage for critical illnesses or accidental death. You are covered for a long duration, while the premiums are affordable.