The most basic feature of a life insurance policy is the death benefit, the lump-sum payment your beneficiaries would receive if you die. It’s the core reason to own life insurance, but it’s not the only one. Some types of insurance offer riders or other features that can play an important role in your financial strategy. There are two main types of coverage: term life insurance and permanent life insurance.

Term life insurance
Term life insurance provides protection for a specific period of time under temporary circumstances. It makes the most sense when your need for coverage will disappear at some point, like children graduating from college. Term insurance offers the greatest amount of coverage for the lowest initial premium. Thus, it’s a good choice for young families or those on a tight budget.

Permanent life insurance
Permanent insurance offers lifelong protection and can accumulate cash value on a tax-deferred basis. The downside? Initial premiums are considerably higher than what you’d pay for a term policy with the same face amount. However, permanent insurance offers unique features, including access to cash, flexibility in paying premiums, tax advantages, guaranteed coverage and stable premiums.

Request a life insurance quote online at AAA.com/Insurance, or call (800) 288-4467 to speak with an agent.