How does term life insurance primarily differ from whole life insurance?

Term life insurance primarily differs from whole life insurance in that it typically has lower premiums. This is because term life insurance is designed to provide coverage for a specified period, such as 10, 20, or 30 years, without any cash value accumulation. The policyholder pays lower premiums for this temporary coverage, making it an attractive option for individuals who want affordable life insurance to protect their beneficiaries during critical years, such as while raising children or paying off a mortgage.

Whole life insurance, on the other hand, combines a death benefit with a cash value component that grows over time, often leading to higher premiums due to the additional features and the insurer's obligation to provide coverage for the insured's whole life, as long as premiums are paid. The higher costs associated with whole life insurance come from the guarantees it offers, including lifelong coverage and the cash value accumulation, which is not a feature of term life insurance.

This difference in premium structure is a key consideration for individuals choosing between these two types of life insurance policies.