Basic life insurance consists of a death benefit that is payable to your beneficiary (a person you name to receive the proceeds) upon your death - usually in a lump sum. Some types of life insurance also have a "savings" component or cash value.
Term Insurance: Life insurance that pays only a death benefit is called term insurance. Typically, term insurance offers the greatest amount of coverage for the lowest initial premium and is a good choice for young families on a tight budget or for a need that is for a limited period of time, such as a mortgage or other loan.
Permanent Insurance: Permanent insurance offers lifelong protection and you can accumulate cash value on a tax-deferred basis. However, initial premiums are considerably higher than you would pay for a term policy with the same face amount.
The type of insurance that is right for you will depend greatly upon your current financial circumstances, your financial goals, your retirement objectives and the needs of your family. To determine the type and amount of coverage that is right for you, seek the advice of an experienced insurance professional.
| Term | Permanent | |
| Length of Coverage | A specified term, typically 20 years | Until age 100 or later, as long as premiums are paid |
| Premiums | Based on your age and health, but typically lower then those of permanent insurance | Initially higher than term premiums, but often level for life |
| Cash Value | None | Accumulates over time on a tax-deferred basis |
| Key advantage | Typically offers the highest death benefit for the lowest cost | Offers lifelong protection and tax-deferred savings |
