Differentiate term life insurance from permanent life insurance.

• A. Term life generally lasts for the insured’s lifetime and builds cash value.
• B. Term life provides coverage for a defined period; permanent life lasts for life and often builds cash value.
• C. Both term and permanent life are designed to be cash-value only; premiums do not vary.
• D. Term life coverage grows with inflation; permanent life remains fixed.

Answer: (B)

The key idea is how long the coverage lasts and whether cash value builds up. Term life insurance provides protection for a defined period—such as 10, 20, or 30 years. If death occurs during that period, beneficiaries receive the death benefit. When the term ends, the coverage generally ends unless you renew at higher rates or convert to a permanent policy. Term policies typically do not accumulate cash value.

Permanent life insurance is designed to stay in force for the insured’s entire life as long as premiums are paid, and it usually includes a cash value component that grows over time. That cash value can be accessed during the insured’s lifetime (via loans or withdrawals, subject to policy rules) and can help with long-term planning. Because of the lifelong protection and the cash value feature, permanent policies are generally more expensive than term.

In short, the main difference is duration and cash value: term covers a limited period with little to no cash value, while permanent lasts for life and builds cash value. The other statements don’t reflect these fundamental distinctions.