Permanent (whole or universal) life insurance

As long as the premiums are paid, this type of coverage is active for your whole life, guaranteeing the eventual payout of a death benefit. It can cost 5-10X more but if the premium is within budget, it can be a good option for anyone interested in insurance that accumulates cash value and doesn't end.

• Permanent life insurance offers cash value accumulation based on paid premiums and a guaranteed minimum rate of return.
• Insured individuals can borrow against the cash value, withdraw it, or keep it to maintain or increase the death benefit.
• Premiums for permanent coverage are higher than term life insurance due to the extended coverage and cash value benefits.

Real-world example: Real-world example: Frank, a 68-year-old retiree, chooses whole life insurance to ensure lifelong coverage and guarantee a death benefit for his final expenses.

Term life insurance

Term policies last for a specific amount of time (your term), and there is no cash value accumulation. The death benefit is only payable to the beneficiaries upon the death of the insured person during the term. Because it costs less and is more straightforward it's a good option for many people.

• Term life insurance allows you to choose the coverage length and death benefit amount, paying out to beneficiaries if you die within the term.
• If you outlive the term, no death benefit is paid, but you can usually renew the policy
• Term life insurance premiums usually cost less than permanent life insurance, making it an affordable option for many.

Real-world example: Sarah, a 35-year-old mother of 2, selects a term life policy to secure her children's college education if she passes away. By aligning the term with her children's expected graduation, she ensures their financial protection during those critical years.