Final answer:
Term-life insurance disadvantages include no cash value accumulation, potential loss of coverage without a death benefit if the insured outlives the term, elevated premiums for high-risk individuals, discouragement of lower-risk individuals due to increased costs, and higher premiums as one ages.
Step-by-step explanation:
The disadvantages of term-life insurance primarily revolve around its temporary nature and lack of financial benefits beyond the death benefit. One key issue is that if the insured outlives the policy term, there is no return of premium and the coverage ends unless a new policy is purchased, often at a higher rate due to increased age and potential health issues. Additionally, there is no investment component in term-life, thus it does not build any cash value that can be borrowed against or withdrawn, which is a benefit offered by whole life insurance policies.
In scenarios where an insured is pinpointed as a high risk, they might face significantly higher premiums, which can pose an affordability challenge. Moreover, those who are in lower-risk categories might be deterred by these increased costs, affecting the insurer's ability to sustain a balanced pool of insured individuals. Lastly, term-life insurance tends to become costlier as one ages, which can make it less attractive to those who begin thinking about life insurance later in life.