What characterizes term life insurance?

Term life insurance is characterized by providing coverage for a specified period of time, typically ranging from one year to 30 years or more. This type of coverage is designed to pay a death benefit to the beneficiary if the insured passes away within that set term. Once the term expires, the policy typically does not provide any benefits, other than possibly offering the option to renew or convert to a permanent policy, depending on the terms set by the insurer.

Unlike permanent life insurance policies, term life does not build cash value; it is purely a protective insurance product. Because of its straightforward structure and limited time frame, term life insurance often comes with lower premiums compared to permanent policies, making it a practical choice for individuals who seek affordable coverage for a specific duration, such as during the years of raising children or paying off a mortgage.