What is the main distinction between term and permanent insurance plans?

The primary distinction between term and permanent insurance plans lies in the features they provide. Permanent insurance plans are designed to offer both lifelong protection and a savings component, which can accumulate cash value and may also generate dividends depending on the policy type. This combination means that policyholders can benefit not only from death benefits but also from potential savings for future needs or financial objectives.

On the other hand, term insurance plans focus solely on providing protection for a specified period. These plans offer death benefits during the term but do not build cash value or include any savings component. Therefore, the protection offered by term plans is temporary and does not have a financial savings aspect associated with it.

The other options introduce aspects that may not fully capture the essence of the distinction. Permanent plans, while often having the ability to accumulate dividends, do not universally guarantee them, and not all permanent plans offer a conversion feature as described. Term plans are typically renewable for a certain period but do not provide the same type of permanent benefits. Thus, the feature that permanent plans offer both protection and savings while term plans provide protection only is the accurate characterization of the core differences.