What distinguishes 'term' life insurance from 'whole' life insurance?

Term life insurance is specifically designed to provide coverage for a predetermined period, or "term," such as 10, 20, or 30 years. This type of insurance offers a death benefit to the beneficiaries if the insured passes away during the specified period. If the term expires and the policyholder is still alive, the coverage ends without any payout and no cash value accumulates.

Whole life insurance, on the other hand, provides lifelong coverage as long as premiums are paid. Aside from the death benefit, whole life policies also accumulate cash value over time, which can be borrowed against or withdrawn. This makes whole life an investment component in addition to merely being a death benefit.

The distinction is therefore clear: term life insurance is temporary and does not build cash value, while whole life insurance is permanent and includes a savings component, ensuring coverage lasts for the policyholder's lifetime.