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What Is Life Insurance?

70% of American families would be bankrupt in months if they lost the primary breadwinner. Simply put, life insurance is a way to provide financial protection for your loved ones in their most vulnerable moments. A life insurance policy ensures that if you die while your policy is active, your loved ones will receive a lump-sum payout, known as a death benefit. The death benefit can be used to cover things like mortgage or rent payments, education costs, funeral arrangements, and more.

Basic Components


The person whose life is covered under the policy. Typically, this is the person who owns the policy and pays the premiums, however, it is possible for the policy owner and payor to be someone other than the insured.


The person(s), entity, or institution(s) that receive the death benefit if the insured person dies. You can name one person (or more) as beneficiaries when you purchase a policy.



The money paid to keep a policy active. Payment ensures that the insurance company will provide your beneficiaries with the stated death benefit in the event of your passing. If you stop paying premiums, the policy lapses.

Death Benefit

The money paid out if the insured person passes away. Death benefits are generally not subject to an income tax and beneficiaries usually receive the benefit in one lump-sum payment.

What Is Term vs Whole Life/Permanent Insurance?

The Answer Lies in the Names

Term life insurance uses premiums to cover you for the determined “term” of the policy, expiring if not claimed within that timeframe. It is the most straight forward and affordable  option, covering you for a set “term” (typically 10 to 30 years). If you pass away during the term period, your beneficiaries receive a cash payment. 

Whole Life/Permanent insurance can last your entire life if premiums remain current. Whole life policies also have the potential to accrue cash value, depending on the policy. However, premiums typically cost between five and 15 times more than a term policy for the same benefit amount. 

Term Insurance

Term premiums are typically more affordable. Premiums never increase. Product type, benefit amounts, and eligibility may vary by carrier.
Just pay the monthly premiums and stay covered. If you pass away during your term, your beneficiaries get a payout.
Terms are flexible. Choose your preferred term length and get coverage when you need it most.
Good for replacing lost income while raising children, paying a mortgage / credit card debt, or protecting a new business.

Whole Life/Permanent Insurance

Part of the premiums you pay with whole life insurance can build up a cash value and earn interest. You may even be able to withdraw or borrow the policy's accumulated cash value.
Your premiums won't change from the start of your payment period to the end.
Coverage last for your entire life, if you keep up with the premiums.
Good for building cash value, potential retirement benefits, complex financial situations, or someone desiring the security of lifetime coverage.

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