How does term life insurance differ from whole life insurance?

Term life insurance is designed to provide coverage for a specified period, such as 10, 20, or 30 years. It pays a death benefit if the insured passes away during that term. Once the term expires, the coverage ends, and there is no payout if the insured is still alive. This type of policy is typically more affordable because it only offers protection for a limited duration and does not accumulate cash value.

In contrast, whole life insurance offers coverage for the insured's entire lifetime. It not only pays a death benefit, but it also builds cash value over time which can be borrowed against or withdrawn, providing an additional financial resource during the lifetime of the policyholder. Therefore, the distinction is clear: term life insurance is temporary coverage, while whole life insurance is permanent and includes features that can provide long-term financial benefits.

The other options mischaracterize aspects of term and whole life insurance. For instance, term life does not cover an entire life, nor does it have a cash value, and the cost comparison can vary widely depending on many factors like age, health, and specifics of each policy.