What is the primary difference between term life insurance and whole life insurance?

The primary difference between term life insurance and whole life insurance lies in the coverage duration and the nature of the policy. Whole life insurance is designed to provide coverage for the entire lifetime of the policyholder, as long as the premiums are paid. This means that as long as the insured remains compliant with their payment obligations, the policy will remain active until their death, ensuring a death benefit is paid out to the beneficiaries.

On the other hand, term life insurance is intended to provide coverage for a specified period, usually ranging from one to thirty years. If the insured passes away during that term, the beneficiaries receive the death benefit; if the term expires and the insured is still living, the insurance coverage ends, and no benefit is payable. Whole life policies also accumulate a cash value over time, which can be borrowed against or withdrawn, a feature not found in term life insurance. This makes whole life insurance not only a protective measure but also part of a financial planning tool.

The distinction in the policy duration and the additional features of whole life insurance clarifies why it is considered to provide coverage for the insured's lifetime.