What defines term life insurance?

Term life insurance is defined by its provision of coverage for a specified period. This type of policy is designed to provide a death benefit to the beneficiary if the insured passes away within the established term, which can range from as short as one year to as long as 30 years or more.

The key characteristic of term life insurance is its temporary nature; it does not build cash value or include an investment component, unlike whole or universal life insurance. Once the term expires, the policyholder may have the option to renew or convert the policy, but the coverage itself is contingent on being in force during that defined time frame. This structure makes term life insurance typically more affordable than permanent insurance options, appealing for those who need coverage for a specific duration, such as while raising children or paying off a mortgage.