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What are the Advantages and Disadvantages of Life Insurance?

Life insurance can help give your family additional financial security if you pass away unexpectedly. It can provide a payout they can use to cover various expenses and move forward with their lives after your death. Advantages and disadvantages of life insurance include financial protection, peace of mind, and more costly premiums with permanent policies. Let’s take a closer look at the pros and cons of life insurance so you can determine whether applying for a policy is worth it for you.

Life insurance definition

Life insurance is a contract between you, the policyholder, and a life insurance company. In exchange for your premiums, the company promises to pay your beneficiaries a set amount if you pass away while your policy is still active.

Two common types of life insurance plans are term life insurance, which offers temporary coverage for a set term that can range from 10 to 30 years, and whole life insurance, which helps protect you and your family for the rest of your life.

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Pros of life insurance

The most noteworthy pros of life insurance include:1

Financial protection for your family

A major advantage of life insurance is that if you suddenly pass away, your loved ones will be able to file a claim and collect a death benefit. They can use the benefit to help pay for many types of expenses, such as funeral costs, debts, everyday bills, and college tuition.

Reasonable premiums

As long as you’re young and healthy, you can expect premiums that fit most budgets. However, even if you’re older or have some health issues, you may find life insurance to be reasonably priced. Compared to whole life plans, term life insurance is typically less expensive, so this type of policy may be the right choice if you have less room in your budget.

Peace of mind

Once you decide on a life insurance policy, you can gain better peace of mind knowing that your loved ones will have the funds to continue living their lives upon your death. It can help them avoid a significant financial burden.

No medical Questions

In many cases, you can apply online from the comfort of your home or office. Some life insurance companies, like Aflac, may also allow you to forgo underwriting questions, for select life plans.

Choose the Plan that’s Right for You

Life insurance is not a one-size-fits-all product. You can choose the plan that meets your particular budget and goals. There are many types of policies and add-ons available.

Cons of life insurance

Here are several cons of life insurance:

Higher premiums for older policyholders

One disadvantage of life insurance is that the older you are, the more you’ll pay for a policy. This is because you’re more likely to pass away during the policy period than a younger policyholder and will, in turn, cost the life insurance company more money.1

Cash value can have a lower rate of return

Some life insurance policies, like whole life insurance, have a cash value component that grows tax-free. While this may be a plus, there’s no guarantee of high returns. 2

Permanent life insurance can be more costly

If you choose a permanent life policy, such as whole life insurance or variable life insurance, you’ll receive lifelong coverage. The caveat, however, is that your premiums will be higher.2

Tips for getting a life insurance policy

If you’re interested in life insurance, consider these tips:3

Apply for life insurance sooner rather than later

Don’t wait to apply for a life insurance policy. The younger you are, the lower the premiums you may qualify for. As you age, you may develop health problems that increase the cost.

Assess how much life insurance coverage you need

The amount of coverage you need from a life insurance policy depends on your unique budget and goals. But a general rule of thumb is that your coverage should be worth at least 10 times your annual salary.3

Compare policy types

Do your research and explore the various types of life insurance plans at your disposal. Aflac offers term life insurance, which comes with different fixed term coverages and lower premiums, and whole life insurance, which will cover you for life.

Consider riders

Life insurance riders are optional add-ons that can help you enhance your policy and receive additional coverage. A few examples of riders you might benefit from include are a term spouse, a term child or benefit if accident occurs causing death.

Is life insurance worth it?

Whether a life insurance policy is worthwhile depends on your unique situation and needs. If you have children you’d like to help protect financially upon your passing, it’s likely a wise choice. Also, life insurance should be on your radar if you owe several large debts, such as a mortgage or car loan, or would like to help ensure your loved ones have enough money to help cover your end-of-life expenses.

Aflac offers term and whole life insurance

As you weigh the pros and cons of life insurance, you may determine that you can benefit from a policy. By applying for life insurance coverage, you’ll be able to help protect your loved ones and gain some peace of mind.

Aflac’s term and whole life insurance policies can give you extensive coverage, premiums that fit most budgets, and other advantages. If you’re unsure of what type of coverage you should get, contact an agent to discuss your options. You may also request a quote online or call 1-855-782-5850 to go through the quote process over the phone.

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