Question

A disadvantage of term insurance is that

Select one:

a. it becomes more expensive when you renew it.

b. coverage ceases if you develop a life threatening illness.

c. you can only exchange your cash value for other insurance.

d. the cash value portion of the premium is larger than other forms.

Answer 1

Ans) Disadvatage of term life insurance policy is that if you have purchased a term life insurance policy and you outlive the period then you will receive no benefit of the purchase or the premium amount this also means that if you again need a life insurance policy then you will have to renew the policy and now it will cost more because term insurances are costlier for those with more age and generally, drastically increases for the person aged above 40s. Not only that permiums are also very large for people with higher age.

Therefore in order to renew the policy one may have to go through the underwriting process again and will be charged higher reflecting the increased age and health.

So, one of the disadvantages of a term life insurance policy is that it becomes more expensive when you renew it.

i.e. option (a)