The advantages and disadvantages of life insurance

The upside to life insurance is obvious: Your beneficiaries will have financial protection  if you die early.

Depending on how your beneficiaries choose to use that protection, known as the death benefit, the proceeds of a life insurance policy can help pay the rent or mortgage; your children’s education; help pay lingering debts, and in the event of  your untimely demise, can help those who are mourning your loss to address financial needs and worries during a difficult time.

But while all of that is true and important, there are other benefits, too, and if you’re thinking about getting life insurance (which you need if you have loved ones who depend on your income), they’re worth considering. You should also look at the drawbacks too. Let’s break down the pros and cons.

The advantages of life insurance

There are plenty of benefits of buying life insurance, here are the five most common:

Life insurance gives you inner peace

When you get home or auto insurance, you’re obviously hoping not to experience a car crash, burglary or flood, and term life insurance is similar: You plan not to use it. If you outlive the term, you don’t get the money you spent on the premium back (but you’re still alive, which is incalculably valuable), so you should think about what the policy bought you, namely: peace of mind. Even a good life comes with some worries, especially if you have kids and/or a partner, and a life insurance policy can give you tremendous tranquility, knowing that there is a financial backup plan for your dependents. If you’re interested in inner peace, it’s also worth noting that term life insurance is cheaper and less time consuming than a yoga retreat, and you don’t need to leave the house for it.

Life insurance gives your family peace of mind

The sense of calm you feel when you know you’ve protected your family with life insurance will also be felt by your family themselves (definitely the adults, and probably the kids once they understand what things cost). If you’re the bread-winner, your partner will have the proceeds of the policy to help with financial needs during a difficult time, which makes for a markedly less stressed household, which is better for everyone in it (including you).

Life insurance is cheaper and easier than you think

Permanent life insurance coverage lasts a lifetime, but can be costly. Term life insurance covers you for a fixed number of years, is surprisingly affordable. For example, a 35-year-old woman in excellent health could buy a 20-year, $500,000 Haven Term policy, issued by MassMutual, for about $20 per month. Also, the process is quick and easy. You can rustle up an initial quote for yourself by answering a few questions.

If you’ve decided to buy a term life insurance policy, you can accomplish most of the process online with an agency like Haven Life. You submit an application, get an instant decision on coverage eligibility, and, if approved, can start coverage that day. Some qualified, healthy Haven Term applicants up to the age of 45 may be able to skip the medical exam entirely through our InstantTerm process.Once an online life insurance application is submitted, we will know whether a medical exam is needed to verify that your health is as reported in the answers provided.

Life insurance is usually tax-free

In the event that you die during your life insurance term, payouts to your beneficiaries are typically tax-free. Not only does this mean your money goes straight to them, but it also means you can do less math. When you’re deciding how much to get insured for, you can work out your family’s future needs without trying to calculate what happens if the tax code changes over the next couple of decades, which means you can put away the calculator and the crystal ball.

Life insurance makes you consider death … but not for too long

When you’re assessing your life insurance options, it’s inevitable that you and your partner will think about mortality, and that’s actually a good thing. Only one-third of us have living wills. So it’s important for families to discuss what each person wants if they should die unexpectedly or end up unconscious in the hospital. While you’re talking about life insurance, it might also be worth discussing preferences to be outlined in your wills, especially since you can create them at no cost as one of the several benefits of being a Haven Term policyholder. It’s why we offer Haven Life Plus, a rider (think: bonus feature) included in the Haven Term policy that offers access to additional benefits that make life less hard.

Once you’ve had those conversations about death – well, you’ve had them. And it’s the same with life insurance. With such weighty matters decided upon, you can get on with the business of living, only with less worry than before. And that may be the greatest advantage of all.

The disadvantages of life insurance

You may have been laboring under the illusion that life insurance has no drawbacks, that it helps to provide security for you and your loved ones and that’s it. Well, no. Everything has downsides, even cupcakes, puppies and vacations. Life insurance is no different. So if you’re thinking about doing something to safeguard your family financially, here are some things to consider before you go getting all selfless.

Life insurance costs money

First, let’s dispense with the most obvious and least important disadvantage of life insurance – it

costs money. This is true, but it’s usually pretty affordable, especially if you get term life insurance, which covers you for a fixed period of time. For most healthy people, term life insurance costs less than a gym membership, car insurance, or a monthly trip to the movies (unless you always go alone). For example, a 30-year-old woman could buy a 20-year, $750,000 Haven Term policy, issued by MassMutual, for about $30 per month.

To really put it in perspective, that’s three times less than what the average person spends on coffee. So if cost isn’t the main disadvantage of life insurance, what is? In a word: death. Or, more precisely, thinking and talking about death, which is a common occurrence when you’re considering life insurance, and which Americans prefer not to do.

Life insurance reminds you of your responsibilities

Which brings us to another disadvantage of life insurance: it makes you realize how numerous and serious those responsibilities have become. You don’t get life insurance for yourself, you get it for those who depend on you. It can be daunting to accept that you’ve become someone with dependents, such as a partner and/or children, and financial responsibilities – like debts and a mortgage – that may outlive you.

The major advantage here is that by getting life insurance you are facing up to those responsibilities head-on, and making sensible plans to deal with them if the worst should happen. You’re behaving properly, with all the discomfort that implies.

Life insurance forces you to think about your mortality

One final disadvantage of life insurance is that it may recalibrate your sense of self- worth. We all consider what we’re worth per year, per day or per hour when evaluating wages and salaries; beyond that, ideas about our value tend to be more abstract. But life insurance puts a price on your head, as if you were a wanted fugitive in the Old West. As a friend of mine said with amused glee when the birth of his daughter made him get life insurance, “I’m now worth more dead than alive.” Not everyone finds this funny. If you have such thoughts, there’s probably someone in your life (spouse, parent, bartender) who can tell you it isn’t so. Your importance on this mortal coil easily exceeds whatever cash value is now attached to your premature exit.

How to take the most advantage of life insurance

Term life insurance is a lot cheaper if you get it when you’re younger and healthier. Although life insurance rates vary across the industry, you will definitely pay more to put a policy in place the older you are.

You may not be able to prevent the march of time, but this is one way you can help limit its effect on your wallet. Fortunately, it’s simple to apply online with Haven Life and get your personalized-to-you rate.

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Michael Davis is a freelance writer and editor who has covered everything from fashion and music to parenting, work, and finance. He has been a chef, restaurateur and record label owner.

Haven Life Plus (Plus) is the marketing name for the Plus Rider which is included as part of the Haven Term policy. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners).

Haven Term is a Term Life Insurance Policy (DTC 042017 [OK1] and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. Policy and rider form numbers and features may vary by state and may not be available in all states. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Our Agency license number in California is OK71922 and in Arkansas, 100139527.

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