What is a major disadvantage of term insurance?

The primary disadvantage of term insurance lies in the fact that if the insured individual passes away after the term period expires, there is no death benefit paid to the beneficiaries. Term insurance is designed to provide coverage for a specified period—such as 10, 20, or 30 years—at which point the policy ends. If the policyholder does not die within that time frame, the coverage ceases to exist, and the beneficiaries receive nothing. This characteristic can be a significant drawback for individuals seeking long-term financial protection for their loved ones, as they may not receive any benefits after investing in premiums over the years.

In contrast, other options highlight different aspects of term insurance. For instance, while premiums can increase upon renewal due to changes in age or health, this situation is not universal for every term policy. Additionally, term insurance is designed specifically not to accumulate cash value over time, which is a structural feature rather than a disadvantage in all contexts. Lastly, many term policies do offer renewal options, although the availability and terms for renewal may vary.