What distinguishes permanent life insurance from term insurance?

The distinction between permanent life insurance and term insurance primarily revolves around the duration of coverage. Permanent life insurance is designed to provide coverage for the insured's entire lifetime, as long as premiums are paid, making it a lifelong financial product. This means that the policy will not expire as term insurance does, which only covers the insured for a specific period—usually 10, 20, or 30 years. If the insured passes away during the term of a term insurance policy, beneficiaries receive a death benefit; however, once the term expires, there is no payout or coverage unless the policy is renewed or converted, often at a higher premium due to increased age.

In contrast, permanent life insurance encompasses various types, such as whole life and universal life, which not only provide a death benefit but also often include an investment or savings component that can accumulate cash value over time. This characteristic adds to the appeal of permanent insurance for long-term financial planning and security.

While factors like premium affordability, exclusivity of insured ages, and the number of claim events might play roles in choosing between insurance options, they do not define the fundamental difference of coverage duration that is at the heart of this distinction.