Term Insurance has been likened to renting and non-Term insurance to purchasing a home. Which would you prefer to have? It all depends on your needs and circumstance. Let's explore the possibilities

1. Compiled by: Reginald Michael Alleyne

2. Advantages/Disadvantages of Term Insurance
• The premium is lower and gives greater coverage at a cheaper price
than non-term insurance
• It does not build cash value so the policy will not have any value at
the end
• Useful for home mortgages
• It has been said that owning term insurance is like renting

3. Advantages/Disadvantages of Non-Term Insurance
• The premium cost is greater and lesser coverage at a higher price
than term insurance
• It builds cash value so the policy will have value at the end
• Useful for family insurance
• It has been said that owning non-term insurance is like buying a
house

4. Is Term LESS expensive or more expensive?
• Clark Kent is 30 years and takes out Term insurance to cover a $1M house
mortgage, in SmallVille, till the age of 60. His premium/month is: $218. In
the 30 years of paying for this Term policy he will pay a total of: $78,480.
• Bruce Wayne also 30, takes out non-Term insurance to cover a $1M house
mortgage, in Gotham, till the age of 60. His premium/month is: $432,
$214 more than Clark!!! In the 30 years of paying back for his non-Term
policy he would pay a total of: $155,520. Bruce pays $77,040 more than
Clark does for the same period of coverage!

5. Is Term least expensive or more expensive?
• Hands down it seems that Clark’s choice is better but wait ...
• Since Bruce Wayne’s non-Term insurance has a cash value, what did he
accumulate at 60? $109K!!! Which is almost $33K than Clark would have
saved by paying for his Term insurance!
• Added to this Bruce could use the accumulated cash value to pay off his
mortgage earlier than Clark! Does this make Bruce the winner of the
battle? Not necessarily! How come you say?

6. Is Term least expensive or more expensive?
• If Clark had invested the $214 he saved every month on paying for his
Term policy vs the non-Term policy Bruce had, he may come out better
than Clark by the age of 60 based on what he saved!
• The question is: would he have had that discipline to do so?
• In the end each must weigh his/her own circumstance to decide whether to
go with Term or non-Term coverage. One is neither right or wrong!

7. If you would like to discuss in more detail any of
the preceding topics I can be contacted as follows:
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†By Email at: rmalleyn1@gmail.com
†LinkedIn: https://www.linkedin.com/in/reginaldmichaelalleyne/