What characteristic differentiates term life insurance from whole life insurance?

The key distinguishing characteristic of term life insurance is that it provides coverage for a specific period of time, often referred to as the "term." This means that the policyholder pays premiums for a predetermined length of time—such as 10, 20, or 30 years—and if the insured individual passes away during this term, the policy pays a death benefit to the beneficiaries.

If the term ends and the policyholder is still alive, there is no payout, and the coverage ceases, unless there are options to renew or convert the policy. In contrast, whole life insurance provides coverage for the insured's lifetime as long as premiums are paid, and it typically builds cash value over time.

The other options relate to features that do not apply to term life insurance: it does not accumulate cash value, it is generally less expensive initially and may increase in cost if renewed, and it typically does not offer dividends like some whole life policies do. Understanding this fundamental difference helps clarify the types of products available and their appropriateness for varying financial goals and needs.