What does term life insurance provide?

Term life insurance provides death benefits only during the specified term. This type of insurance is designed to offer financial protection to beneficiaries in the event of the policyholder's death within a specific period, such as 10, 20, or 30 years. If the policyholder dies during this term, the insurance company pays out a death benefit to the named beneficiaries. However, if the policyholder outlives the term, there is no payout or cash value accumulated; the policy simply expires.

This characteristic distinguishes term life insurance from other types of life insurance, such as whole life or universal life insurance, which include a cash value component that accumulates over time. Term life insurance's sole focus is on providing a straightforward death benefit for a limited duration, making it a cost-effective choice for individuals primarily interested in providing financial security for their loved ones in the event of their untimely death.