Pros and Cons of Life Insurance

Should I get a life insurance policy now or invest my money elsewhere? This can be a very tricky question to answer when you consider the following factors:

  • Your age
  • Your income
  • Your life expectancy
  • Your occupation
  • Your beneficiary
  • Your short or long-term goals
  • Your family (spouse and children)

That said, here are the pros and cons of having life insurance.


Tax benefits: There are mainly two types of life insurance: term life insurance and permanent insurance. If you get a permanent life insurance policy, rest assured your cash value will be free from tax until when you want to withdraw or borrow it.

Flexibility: Most life insurance policies are very flexible. You can make arrangements with your insurer when and how you want to pay your premium. You can also get a considerable portion of your money back by surrendering your policy.

Protection: There is no better way to help your beneficiaries (kids, spouse, etc.) when you are no more than getting a life insurance policy. At least, your children will be able to use your death benefits to pay mortgage, debts, funeral expenses, and much more.

Affordability: Life insurance is for everyone. If you want something affordable, you will get a good deal if you go for term life insurance.


Bankruptcy: If the insurance company goes bankrupt, you may not be able to get your cash value and your beneficiary may not be able to your death benefit. This happens once in a blue moon, though.

Limited options: If you have health problems, most insurance companies will limit your options to get maximum coverage. For instance, if you have a terminal illness, your insurer will ask you to pay more premiums than those who are healthy. In some cases, they may even decline your application.

Cost: As the saying goes, life insurance is not for the poor. It’s not only for the rich, though. But you need to have a regular source of income to pay your premium, lest you lose your coverage.