Reader’s Question:

My insurance agent here in Miami FL told me that term life insurance policy is the cheapest insurance policy in the market. Is it true? If so, why? What are the disadvantages and advantages?

Cindy

Miami, FL

Thank you for asking Cindy.

Yes, term life insurance is the cheapest life insurance policy you can buy in Miami. It is a cheap life insurance since this policy covers you only for a period of years. Term life coverage ranges from 5 up to 30 years.
Unlike other types of insurance policies, term life has no cash value. It doesn’t accumulate any cash value over time, the reason why it remains to be the cheapest insurance policy you can buy.

Although it is a cheap life insurance, it has its disadvantages. The price of term life insurance policy may go up sharply at the end of the term. It will keep going up every year as it will become annual renewable, unless converted to something else. Insurance companies allow you to convert a term to anything they have but your premium will have to be adjusted to your age. No matter what you do, the price of term life insurance will go up over time. If your health changes, you might end up unable to purchase a new policy from any other insurer.

But because it is a cheap life insurance, you might be able to enjoy many riders with this type of policy.