How does term life differ from permanent life?

• A. Term life has a cash value; permanent life does not.
• B. Term life lasts for life; permanent life lasts a term.
• C. Term life provides temporary coverage with no cash value; permanent life lasts for the insured's life and includes a cash value component.
• D. Term life is always more expensive than permanent life.

Answer: (C)

Term life focuses on pure protection for a defined period and does not build cash value. If the insured dies during the term, beneficiaries receive the death benefit; if the term ends while alive, the coverage ends unless you renew or convert (often at a higher premium). Permanent life covers the insured for life and includes a cash value component that grows over time and can be borrowed against or used in other ways. Because of the lifetime coverage and the cash value, permanent life generally costs more than term life.

So the best description is that term life provides temporary coverage with no cash value, while permanent life lasts for the insured's life and includes a cash value component.