Co-Founder, Coastal Financial Partners Group, California
All life insurance falls into one of two categories of coverage. Each category has certain characteristics that make it more suitable for certain needs.
Term life insurance is for temporary protection needs. If the insured dies during the term period, the insurer pays a death benefit. If the insured survives the coverage period, coverage ends.
Permanent or cash value life insurance is for permanent protection needs lasting one's lifetime. It provides coverage for life and, provided the premiums are paid and the policy does not lapse, a death benefit will always be paid. Cash values build over time and can be withdrawn or borrowed if needed.
Term usually expires before you do while permanent is designed to last for your lifetime.
The coverage characteristics of life insurance are relatively simple. Life insurance is meant to replace the income, the debt or the financial need of a business partner, spouse or loved one that would be in need in case of your death. A person dependent upon your income can be compensated, such as a child or spouse. An institution can have a debt repaid, such as a bank, mortgage company or credit union. A business that would suffer financially from the death of a partner or key employee. Life insurance is the most affordable way to cover these financial losses due to an unexpected or sudden death. We all die someday, don't leave a big financial mess behind for those that depend on you.
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Term life insurance is for temporary protection needs. If the insured dies during the term period, the insurer pays a death benefit. If the insured survives the coverage period, coverage ends.
Permanent or cash value life insurance is for permanent protection needs lasting one's lifetime. It provides coverage for life and, provided the premiums are paid and the policy does not lapse, a death benefit will always be paid. Cash values build over time and can be withdrawn or borrowed if needed.
Term usually expires before you do while permanent is designed to last for your lifetime.