What differentiates term life insurance from permanent life insurance?

The selection of permanent life insurance as the differentiating factor makes sense because one of its defining characteristics is its ability to accumulate cash value over time. This cash value component not only serves as a savings or investment element within the policy but also can be borrowed against or withdrawn, providing additional financial benefits to the insured.

In contrast, term life insurance does not build cash value; it purely provides a death benefit for a specified term. Once the term expires, the policyholder receives no money back unless they choose to renew, and it offers no potential for growth or investment.

While it's also true that term life can be less expensive than permanent policies, this relates to the pricing rather than a fundamental characteristic of the insurance types themselves. The fixed duration of term life insurance signifies its temporary nature and does not reflect a financial accumulation aspect. Permanent life insurance thus stands out primarily due to its cash value feature, which is a substantial benefit that may align with long-term financial planning goals. Additionally, the claim that permanent life insurance has no restrictions is misleading; in reality, all insurance policies come with specific terms, conditions, and limitations.