How does term life insurance differ from whole life insurance?

Term life insurance is designed to provide coverage for a specific period, such as 10, 20, or 30 years. The primary purpose of this type of insurance is to offer financial protection to beneficiaries during the policyholder's working years, often when financial obligations like mortgages or education costs for children are at their peak. If the insured person passes away during the term of the policy, the beneficiaries receive the death benefit.

This is in contrast to whole life insurance, which offers lifelong coverage. It not only provides a death benefit but also includes a savings component that accumulates cash value over time. This cash value can be borrowed against or withdrawn, providing additional financial options for the insured. Additionally, whole life insurance premiums are generally higher than term life premiums because they cover the insured for their entire life and incorporate the savings element.

By focusing on the specific time frame and nature of coverage, the distinction between term life and whole life insurance becomes clear, emphasizing the temporary nature of term life insurance relative to the permanent coverage of whole life policies.