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Term Or Permanent There are two categories of Life Insurance, term life insurance (short term) and permanent life insurance (long term). Often, the solution is a combination of both, since most people have a need for both temporary (term insurance) and lifetime (permanent insurance) protection.

To help you decide, consider five basic factors:

    - Death benefit
    - Duration of coverage
    - Premiums
    - Cash value
    - Net cost of insurance
Death Benefit Permanent life insurance provides a death benefit for as long as you live.
Term life insurance provides a death benefit for a stated period of time. Duration of Coverage The longer period of time that insurance protection is needed, the more consideration you should give to permanent life insurance.
For short-term needs, term life insurance may be appropriate.

Examples of permanent needs are:

    - Use of death benefit to pay bills or provide money for loved ones
    - Use of death benefit to pay final expenses
    - Use of death benefit to provide money for a favorite charity
    - Use of death benefit to pay estate taxes
    - Fund a business buy/sell agreement or provide key person protection
Examples of temporary needs are:
    - Use of death benefit to pay educational expenses
    - Use of death benefit to pay off home mortgage
    - Use of death benefit to pay off a loan

Premium Permanent life insurance premiums are generally level and payable for life.
Term life insurance premiums will increase over time, are payable for a specific period of time and generally increase at each renewal. Cash Value Cash values can provide money later to help with temporary needs or emergencies.

Permanent life insurance accumulates cash values:

    - You may borrow against the cash value as a policy loan at the current policy loan interest rate.
    - Term life insurance does not accumulate cash values, nor does it earn dividends.
Net Cost of Insurance The net cost of insurance compares the premium payment and the cash value. You get the net cost of insurance by subtracting the total premiums paid from the cash value.