Understanding Coverage Types
Life insurance is commonly discussed in two broad categories: term coverage and permanent or cash-value coverage. They are designed differently, so comparing only the premium can miss important differences.
Term life insurance
Term coverage is designed to provide a death benefit for a stated period. It is commonly used to protect temporary responsibilities such as income replacement, a mortgage, debt, or the years when children are financially dependent.
Permanent or cash-value coverage
Permanent policies may combine a death benefit with cash-value features and can have different premium structures, costs, guarantees, and access rules. Policy design varies by product and insurer.
Questions to compare
Ask about the length of coverage, death benefit, premium schedule, renewal provisions, cash-value features, loans or withdrawals, riders, exclusions, and how the policy fits your overall financial plan.