Which of the following best defines a term life insurance policy?

Which of the following best defines a term life insurance policy?

• A. Policy lasts for the lifetime of the insured
• B. Policy provides coverage for a specific period
• C. Policy has a cash value component
• D. Policy can be converted to an annuity

Answer: (B)

A term life insurance policy is specifically designed to provide coverage for a predetermined, fixed period, often ranging from one year to 30 years. It protects the insured's beneficiaries in the event of the insured's death within that policy term but does not have any cash value accumulation like whole or universal life insurance. Term policies are often more affordable than permanent life insurance because they don’t include the investment component or cash value that build up over time. This clarity is crucial for anyone considering life insurance, as it outlines the purpose and limitations of term life policies compared to permanent policies. Understanding this helps consumers determine which type of life insurance best meets their financial protection needs.

A term life insurance policy is specifically designed to provide coverage for a predetermined, fixed period, often ranging from one year to 30 years. It protects the insured's beneficiaries in the event of the insured's death within that policy term but does not have any cash value accumulation like whole or universal life insurance. Term policies are often more affordable than permanent life insurance because they don’t include the investment component or cash value that build up over time.

This clarity is crucial for anyone considering life insurance, as it outlines the purpose and limitations of term life policies compared to permanent policies. Understanding this helps consumers determine which type of life insurance best meets their financial protection needs.