What is a key difference between term life policies and whole life policies?

The distinction between term life policies and whole life policies primarily revolves around the nature of coverage and the benefits they provide over time. Whole life insurance is designed to provide coverage for the entire lifetime of the insured, as long as the premiums are paid. This policy not only offers a death benefit but also accumulates cash value that can be accessed during the policyholder's lifetime. Thus, as long as the policyholder is adhering to the terms, benefits can be paid out at any age, making it a comprehensive option for long-term financial planning.

In contrast, term life insurance covers the insured for a specific period or "term." If the insured passes away during this period, the policy pays a death benefit to the beneficiaries. However, if the term ends and the policyholder is still alive, there is no payout or cash value accumulated. This key difference highlights that whole life policies provide ongoing coverage until the insured's death, while term policies are limited to a defined duration.