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

The primary difference between term and whole life insurance lies in the coverage duration. Term insurance is designed to provide protection for a specific period, often ranging from a few years to several decades. If the policyholder passes away during this term, the beneficiaries receive the death benefit. However, if the term expires and the policyholder is still alive, there is no payout or return of premiums.

In contrast, whole life insurance offers lifelong coverage as long as premiums are paid, and it also accumulates cash value over time, which can be borrowed against or withdrawn. The other choices do not accurately address the fundamental distinction between these two types of insurance. For example, while whole life policies typically do have cash value accumulation, term insurance does not. Additionally, whole life is generally more expensive than term insurance due to the lifelong coverage and cash value feature. Therefore, identifying that term insurance provides coverage for a specific period captures the essence of the difference in coverage scope between these two types of life insurance.