What are the two main types of life insurance?

The correct response identifies term life insurance and permanent life insurance as the two main types of life insurance. Term life insurance provides coverage for a specific period, often ranging from one to thirty years, and pays a death benefit if the insured passes away during that term. This type of insurance is generally more affordable and is designed to provide financial protection for a temporary need, such as raising children or paying off a mortgage.

Permanent life insurance, on the other hand, offers coverage that lasts for the insured's entire life, as long as premiums are paid. It also includes a cash value component that grows over time, potentially providing a source of savings or loan options for the policyholder. This type encompasses various subcategories, including whole life, universal life, and variable life insurance, each with different features and flexibility.

Understanding the distinction between these two main types of life insurance is crucial for individuals when assessing their long-term financial needs and ensuring they choose the right policy for their circumstances.