How does term life insurance differ from whole life insurance?

Term life insurance is designed to provide coverage for a specific period, often ranging from one to thirty years. If the insured passes away during this term, the policy pays a death benefit to the beneficiaries. This structure makes it suitable for individuals seeking protection against temporary financial obligations, such as a mortgage or education expenses for children.

In contrast, whole life insurance typically offers coverage for the entire lifetime of the insured, as long as the premiums are paid. This type of insurance also accumulates cash value over time, allowing policyholders to borrow against or cash out the policy if needed.

The option addressing coverage for a specified term accurately captures the essence of term life insurance, emphasizing its temporary nature and linking it to the particular period for which the insurance is active. Understanding this distinction helps individuals choose a life insurance type that aligns with their financial goals and needs.