Why are Term-100 Insurance Policies generally less expensive than Whole Life Insurance Policies?

Term-100 Insurance Policies are generally less expensive than Whole Life Insurance Policies primarily because they do not accumulate a cash value. This means that the premiums paid for Term-100 are strictly for the cost of insurance coverage, allowing for a lower initial premium compared to Whole Life, which includes cash value accumulation as part of its structure.

Whole Life Insurance policies typically provide lifelong coverage and include a savings component that grows over time, which can be accessed by the policyholder. This cash value feature adds to the overall cost of the policy since a portion of the premiums contributes to building that investment over time. In contrast, since Term-100 policies don't have this component, all the premium payments are allocated toward the insurance protection itself, resulting in lower pricing.

Considering other options, the cash value component is a defining characteristic of Whole Life Insurance, making it more expensive. The assertion that Term-100 policies cover only specific risks doesn’t hold since they provide coverage for a defined period (lifetime coverage in this case), making them comparably broad in scope. Additionally, the availability of more payment options does not inherently affect the base cost of the insurance product itself, focusing instead on the accessibility of payment methods rather than the cost-effectiveness of the insurance.