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

The primary distinction between term life insurance and whole life insurance lies in the duration of coverage. Term life insurance is designed to provide coverage for a specified period, such as 10, 20, or 30 years. If the insured passes away during this term, the beneficiaries receive a death benefit. However, if the term expires and the insured is still alive, the coverage ends, and no benefits are paid out.

On the other hand, whole life insurance provides coverage for the entire lifetime of the insured, as long as the premiums are paid. It also builds cash value over time, which can be borrowed against or withdrawn.

The other choices present common misconceptions or inaccuracies about these types of policies. Whole life insurance is generally more expensive due to its lifelong coverage and cash value component, while term life insurance does not accumulate cash value at all. Additionally, whole life insurance is not temporary; it offers lifelong protection. This makes the distinction between term and whole life insurance quite clear, emphasizing that the correct choice highlights the specific time-limited nature of term life insurance.