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Permanent Life Insurance

This kind of life insurance never expires. That means that, as long as you pay your premiums, you will have lifetime protection. As with all life insurance, a permanent life insurance policy will pay a death benefit to your beneficiaries in the event of your death. With some permanent life insurance policies, your premiums may even accrue cash value that is tax-deferred. If you get some life insurance with this option, you can access the cash value to provide retirement income, cover emergency expenses, or pay for education costs. Eventually, you may even be able to apply your cash value toward your premiums, which could mean you don't have to pay them anymore. If any of the statements below apply to you, you might consider a permanent policy when you get some life insurance:

• You want a buffer against inflation. Some permanent policies let you increase your death benefit to keep up with inflation.
• You would like tax breaks. You can get some life insurance that accrues cash value on a tax-deferred basis.
• You would like the option of accessing cash value. With permanent life insurance, you can withdraw the cash value of your policy or take out a loan on it.
• You can make financial decisions. You can choose how your premiums are invested with some permanent life insurance policies.

Term Life Insurance

Term life insurance is the other option you will have when you get some life insurance. The less expensive of the two, term life insurance is a basic policy with a straightforward cash benefit. Your beneficiaries will receive this benefit if you die within the specified term, which ranges from 5-30 years. If you are still alive at the end of this term and do not renew, your policy will expire and your beneficiaries will not receive a death benefit. With term life insurance, your premiums do not double as investments, which is why term life insurance tends to be cheaper than permanent life insurance. If any of the statements below apply to you, you might consider a term life policy when you get some life insurance:

• You cannot afford a permanent life insurance policy. If you are not in a position financially to pay the higher premiums of a permanent policy, you might opt for term.
• You have young kids. If you have young children, you can buy term life protection that will cover you until they are financially independent.
• You want home mortgage/loan protection. Term life policies will let you select coverage to match your decreasing loan or mortgage amounts.
• You need supplemental coverage. Term life is a good way to supplement other coverage for times when you feel you need extra protection.

Check out the next page to see who needs life insurance.