What type of coverage does term life insurance provide?

Term life insurance provides coverage for a specified period, which is characteristic of this type of policy. With term life, the policyholder selects a term that typically ranges from one to thirty years, during which the insurance company pays out a death benefit if the insured person passes away. If the insured survives the term, the coverage expires without any value or payout.

This specific arrangement makes term life insurance distinct from permanent life insurance products, which offer lifetime coverage and may include a cash value component or investment returns. The focus of term life is strictly on providing a death benefit for a set duration, making it a more affordable option for individuals seeking life insurance primarily for protection during significant life events, such as raising children or paying off a mortgage. Thus, the correct option reflects the fundamental nature of term life insurance as a temporary coverage solution.