In what way 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. This means that if the insured passes away during that term, the beneficiaries receive the death benefit. Once the term expires, coverage ends unless the policyholder takes action to renew or convert the policy. This characteristic sets term life insurance apart from whole life insurance, which is intended to last for the entire lifetime of the insured and is not limited to a specific term.

While it is true that term life insurance generally has lower premiums compared to whole life insurance, this is not the defining characteristic that differentiates it. Whole life insurance accumulates cash value over time and provides lifelong coverage, which contrasts with the temporary nature of term life insurance. Therefore, the aspect that makes term life insurance unique is its focus on providing coverage only for a designated period, making it suitable for short-term needs such as protecting a family during crucial years or covering a mortgage.