What are the two main types of life insurance?

The correct answer identifies the two primary categories that encompass the various types of life insurance available in the market. Term life insurance provides coverage for a specific period, usually ranging from one to thirty years, paying a benefit only if the insured passes away during that term. This type is generally more affordable and does not build cash value.

On the other hand, permanent life insurance, which includes whole life and universal life insurance, offers coverage for the insured's entire lifetime and often includes a cash value component that grows over time. This type of insurance is designed for lifelong coverage and can provide both a death benefit and a savings or investment element.

Understanding these two categories helps individuals choose the right type of life insurance based on their financial needs, coverage duration preferences, and long-term goals.