Final answer:
Whole life insurance provides lifelong coverage and builds cash value over time, while term life insurance offers coverage for a set period with no cash value component.
Step-by-step explanation:
The fundamental difference between whole life insurance and term life insurance is that whole life insurance never expires as long as premiums are paid, while term life insurance is only active for a specified period. Whole life insurance, also known as cash-value life insurance, includes a death benefit and, over time, builds cash value which can be borrowed against by the policyholder. Term life insurance, on the other hand, provides coverage for a set term, such as 10, 20, or 30 years; it does not have a cash value component and simply pays out a death benefit if the insured individual dies during the term of the policy.
It is important to note that while premiums for term life insurance generally remain the same over the policy term, whole life insurance payments can be higher since part of the premium goes towards building cash value. Although whole life insurance offers both a death benefit and a potential cash accumulation, term life insurance is purely for death benefit protection.