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Instances Where Life Insurance Offers Risks

Instances Where Life Insurance Offers Risks

You place a wager when you buy a life insurance policy that you will live longer than the policy’s term. Your beneficiaries would receive the death benefit if you passed away within the policy’s term. You receive the death benefit if you live over the policy’s term and you keep your coverage as long as you keep making the payments.

The majority of individuals do live longer than the terms of their life insurance policy, so this may seem like a secure decision, but there are some hazards to take into account before purchasing a policy. Bill Schantz notes that knowing the elements of risks associated with life insurance policies can help solve a number of issues.

Risks Associated with Life Insurance Purchase According to Bill Schantz

Failure to Maintain or Retain Your Policy

If you don’t pay your premiums, Bill Schantz claims that your insurance will expire and you won’t have coverage any longer. Any death benefit that you have paid into the policy will also be lost if you decide to cancel (surrender) it. In either scenario, you will have to reapply if you later decide that you require life insurance and risk having your application rejected or having to pay a higher premium because of your age or health.

A Decrease in Policy Value Is Also a Risk, Bill Schantz Notes

Although whole life insurance policies do include a portion of cash value, the main objective of life insurance is to give your beneficiaries a death benefit. As a result, if you live past the policy’s term, the death benefit will get smaller every year as you get older. This could be an issue if you depend on the death benefit to pay for funeral costs or to support your family after you pass away.

You Might Outlive Your Coverage

Bill Schantz thinks there’s a potential you could outlast your term life insurance coverage if you buy one. Due to your age or current health, you might not be approved for coverage if you still need life insurance after the policy ends. Since whole life insurance policies never expire, they do not have this issue, although they may cost more than term life insurance policies.

You Might Not Need the Death Benefit for Your Family

The possibility that your beneficiaries would never use the death benefit is one of the biggest dangers of purchasing life insurance. The death benefit can be crucial for ensuring financial security of your spouse and young children.

However, if your spouse is financially secure and your grown children are self-sufficient, they might not require the death benefit from your life insurance policy. In this situation, it could be preferable to put the cash you would have used to pay the premiums into a retirement account or another type of investment.


Bill Schantz mentions some risks associated with buying a life insurance policy, but ultimately it is up to you to decide whether the advantages outweigh the risks. Life insurance can provide you comfort in knowing that your family won’t suffer financially in the event of your passing. However, if your family is financially stable, you might not need life insurance and could instead use the money to make other investments.