What describes term life insurance?

Term life insurance is characterized by providing coverage for a specified term or duration. This means that the insurance policy is valid for a limited period, typically ranging from one year to several decades, depending on the terms of the policy. If the insured passes away during this term, the beneficiaries receive the death benefit. However, if the insured survives beyond the term, the coverage ends, and no benefit is paid out.

This type of insurance does not have a cash value component, unlike whole life or universal life insurance, which accumulate cash value over time. Furthermore, term life insurance is not primarily designed as an investment-focused option but rather offers straightforward protection against the financial consequences of premature death for a defined period. Thus, the focus of term life insurance is on providing a death benefit without additional features such as cash value accumulation or investment growth.