How does a 'whole life policy' differ from a 'term life policy'?

A whole life policy is distinguished by its incorporation of a savings or cash value component, which allows policyholders to accumulate savings over time. This aspect is a key differentiator from a term life policy, which solely provides coverage for a specified term or period without any accumulation of cash value.

In a whole life policy, the premiums are generally higher as they contribute not only to the death benefit but also to the cash value that can grow over the life of the policy and can be borrowed against or even withdrawn. This makes whole life insurance a more permanent form of life insurance, offering lifetime coverage as long as the premiums are paid.

Term life insurance, on the other hand, offers coverage for a specific period, typically ranging from one to thirty years, and does not build any cash value. It is designed purely to provide financial protection for beneficiaries if the insured passes away during the term.

The other options do not accurately capture the primary distinction between these two types of policies, highlighting the unique financial benefits associated with whole life insurance.