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

The main distinguishing characteristic between term life insurance and whole life insurance is related to cash value accumulation. Term life insurance is designed to provide coverage for a specific period, or "term," and does not accumulate cash value over time. Essentially, it functions purely as a death benefit for designated beneficiaries if the insured passes away within that term.

On the other hand, whole life insurance is a type of permanent life insurance that includes a death benefit as well as a savings component, or cash value. This cash value accumulates over the life of the policy, allowing policyholders not only to provide a financial safety net for their beneficiaries but also to build equity in the policy that can be borrowed against or withdrawn.

The other options present characteristics that do not accurately capture the fundamental differences related to cash value. For example, term life insurance can be purchased by individuals of various age groups, and it is generally more affordable than whole life insurance due to its lack of cash value and shorter commitment. Additionally, the requirements for medical exams can vary between insurers and policy types, making that point not universally applicable. Thus, the presence or absence of cash value is indeed the core difference that clarifies the operational nature of these two types of life insurance policies.