Pitfalls of Term Life Insurance (And the Good)

In this episode, I review the biggest mistakes that are made with Term insurance and review the perks of term.  This one strategy can be the roadblock between you and and future goals or the key to opening more options.

Tyrone Harvey
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Transcript

Welcome, everybody, to the Wealth Bridge Podcast. This is my first recording of 2024, and I'm back after a little break due to some logistical issues. I won't spend too much time on it. The focus of today's episode is on term insurance pitfalls.

Now, you might be thinking, 'I've always heard that term insurance is the best thing out there for you.' Well, term insurance is indeed a great tool. My mission on this podcast is to present the pros and cons of each financial tool so you can make informed decisions for you and your family. If you need help, I'm here to guide you through the decision-making process.

As we step into 2024, I'm standing in my new fantastic standing desk, which I absolutely love. If you're watching on YouTube, you can see that I'm standing. I'm incorporating more standing time during the day as I go through my work tasks, which feels fantastic. I hope you all have some fitness and financial goals for this year, and I'm here to answer any questions you have about those goals or strategies for your family.

Now, let's dive into today's topic—term insurance pitfalls. Term insurance is often considered the most economical insurance product to protect your family. It's a fantastic tool, but there are some aspects of traditional financial planning that aren't talked about, especially what happens when you transition from a protection phase to a distribution phase of your entire estate.

So, what are some pitfalls of term insurance? Let's start with the downsides before we get into the positives. The first pitfall is expiration. Many term insurance policies don't pay out because they expire. Even though carriers offer the option to renew, the price increases exponentially, making it unaffordable for most.

The second pitfall is having a term insurance policy with no conversion abilities. Having a non-convertible policy means you're stuck with the term, and you lose the valuable option to convert it to something permanent later in life.

The third pitfall is overpaying. Many people overpay for term insurance, especially if they are relatively healthy and under 40. It's crucial to shop around and get quotes to ensure you're not paying more than necessary.

Now, let's shift to the positive aspects of term insurance. The price is one of its greatest strengths. Term insurance provides fantastic coverage for pennies per month. It's the cheapest product for getting the most coverage and offers peace of mind for your family at a reasonable cost.

Another positive is the level period. Your premiums remain constant during the term, providing predictability and affordability. Term insurance allows you to fully insure your family with significant coverage at a minimal cost.

In conclusion, term insurance is a powerful tool, but it's essential to be aware of potential pitfalls and make informed decisions. If you need assistance or have questions about your insurance needs, feel free to reach out to me. Thank you for tuning in, and I look forward to guiding you on your financial journey.