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When NOT to buy term

• When you want protection for your entire life and want to leave final expense or legacy money to a surviving spouse or to children.
  
  
• When you want something that will build cash value which you can choose to cash out if you no longer need the insurance, such as Universal Life. No term insurance will build cash value.
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• When you want level premium and level face value.
  
  
• When you have already reached retirement age and will probably not be able to afford the increases after the term expires. Instead, pay a little more for a bit less coverage to know you have final expenses taken care of.

Buyer Beware:
According to government statistics, less than 45% of working families have privately owned life insurance policies. Many mistakenly think that what they have "on the job" will remain with them when they retire. Occasionally it does, but usually at a radically reduced face value—often not even enough to pay final expenses. If you want to keep what you have on the job, you will be given the option of converting it to individual life of some sort, providing you are with that employer long enough, but may find the premium well beyond reach of your retirement income. Thus it is important to have your life insurance in place while you are young.

However, people reach retirement age every day and realize they do not have the life insurance they thought they had. If you are in that boat and make one phone call or send one email in search of life insurance, you are apt to find your mail box stuffed with multiple offers of life insurance, many of them promising "immediate coverage" or "no medical underwriting." Be extremely cautious in responding to these offers. In fact, it is better to speak with an insurance agent to make sure you fully understand the offer before sending any money.

Most mail order offers are Term Life, some as short as five years. In fact, most five year term policies are being offered to seniors who may not realize that the premium can increase radically as soon as the five years are up. At that time, if you have additional health issues, it may be impossible to get anything else.

Some mail order offers are also "graded" benefits. That means the policy will not pay the entire face value—although you will get your premium back with interest—until you have lived two or three more years. Furthermore, if you purchase a policy that is graded for the first two years, and is only a five year term, you actually have coverage for only three years. That type of policy may be useful for some people—for example a cancer patient who may live two years but is not likely to outlive the term. However, you should consider your situation very carefully before buying into that type of policy.