What is a term life insurance policy?

A term life insurance policy is defined as a type of life insurance that provides coverage for a specific period, or "term." This means that the coverage is effective only during that predetermined time frame, which can range from a few years to several decades. If the insured individual passes away during the term, the beneficiaries receive the death benefit. However, if the term expires and the individual is still alive, there is no payout, and the coverage ends unless it is renewed or converted to a different type of policy.

This type of policy is often chosen for its affordability and simplicity, as it typically has lower premiums compared to permanent life insurance policies, which provide lifelong coverage. The focus of term life insurance is primarily on providing financial protection during essential years, such as while raising children or paying off a mortgage. Permanent policies, such as whole or universal life, offer lifelong coverage and often include a cash value component, which is not a feature of term insurance.

Likewise, the other options refer to different types of life insurance policies that do not represent the characteristics of term life. For example, accidental death only covers deaths resulting directly from an accident, while investment-linked policies include a savings or investment component, which is distinct from the straightforward death benefit focus of