Asked by Christina  |  Submitted January 04, 2016

Term insurance seems like a ripoff since you pay and pay and don’t get anything. Why do people buy it when you get nothing for it?

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  Answers  |  5

January 05, 2016

I hear an assumption in the question. It is that "you don't get anything", and that is an incorrect assumption. Here is why: term buyers get the security that comes with being covered by a life insurance plan. In all cases, when the insured dies during the term and when the death benefit is paid, the value of term life insurance is realized by those who hold the check.

What I am hearing in the questions is also this; that there is something else that you expect from term life insurance beyond a death benefit. Term life insurance does not set the expectation and then fail to deliver. Your expectation is unrealistic for this type of coverage. Does your homeowners insurance do anything for you other than cover the risks associated with that coverage? Do you expect there to be cash value to borrow from with your auto insurance? Do you see value in those coverages?

People buy term insurance for the coverage. They pay less to get that coverage than they would pay with permanent coverage. It fits their temporary needs and it works for their budget. There is an obvious value that they can see that you are overlooking. Personally, I have both term and permanent coverage because I see value in both!

Kirby
Term.com
LifeInsuranceToday.US

$commenter.renderDisplayableName() | 01.17.17 @ 13:34

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January 06, 2016

Christina, I hear your frustration. And I also agree with Kirby. I just want to add these thoughts:

1. "Term" coverage is an "affordable" way to address the risk of a loss (life, limb, and or income).

2. It protects young families from the loss of bread winner, or helps an older individual address his or her final life expenses.

Christina, remember, insurance is to protect you or others important to you against a loss. There are many types of policies to achieve that objective. I recommend finding an agent you are comfortable with. And one who will to listen you, and what you need in an insurance policy.

I hope my response was helpful,

Darius.

$commenter.renderDisplayableName() | 01.17.17 @ 13:34

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March 03, 2016

While I own permanent insurance I understand the need for term insurance. Term isn't a ripoff, it's simply coverage for a short term need. You know your start and stop date and don't have plans for insurance after that date. That is where term works best. And there are a few plans out there that refund your premiums after the term coverage ends, if that works better for you. If you have a long term need, permanent is a better choice, but that doesn't mean term lacks value.

$commenter.renderDisplayableName() | 01.17.17 @ 13:34

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March 08, 2016

All great answers, so I'll just add this: With many companies, the owner of a term policy is allowed to convert part or all of the term policy into permanent coverage at any time during the term. For example, if I had a young couple with a new family and a tight budget, we might choose 30-year term coverage for now, knowing that anytime during that 30 years, the insured person(s) can convert portions of the term policy to permanent, with no additional medical questions. It allows the family to get the coverage they need now, at a price they can afford, and it protects their future insurability.

$commenter.renderDisplayableName() | 01.17.17 @ 13:34

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April 14, 2016

Best answer? Term life insurance is cheap. Most who buy it either A) don't have much of a budget, or B (and much more likely) don't understand any other life insurance concept, and refuse to listen to anything else.

Unfortunately there's enough misleading negative "press" surrounding permanent life insurance that any quick web search will deter someone rather easily. It's sad, but true.
S

Saving in WI | 08.05.16 @ 16:51

Whole life insurance is never a good option for consumers. It is a good option for insurance agents who sell it though!

$commenter.renderDisplayableName() | 01.17.17 @ 13:34

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