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

The distinction between whole life and term life insurance is primarily defined by the duration of coverage and the nature of the policy. Whole life insurance is designed to provide coverage for the entire lifetime of the insured, as long as the premiums are paid. This means that regardless of when the insured passes away, the benefit will be paid to the beneficiaries, making it a lifelong commitment.

In contrast, term life insurance is structured to cover a specific period, such as 10, 20, or 30 years. If the insured passes away during this term, the beneficiaries receive the death benefit; however, if the term ends and the insured is still alive, there is no payout, and coverage ceases unless the policy is renewed or converted.

Understanding this fundamental difference is crucial for individuals looking to choose between these two types of life insurance. Whole life offers lifelong protection and is typically used as a long-term financial strategy, whereas term life is more suited for those seeking temporary coverage often tied to specific financial responsibilities like raising children or paying off a mortgage.