What is a common feature of a term life insurance policy?

A common feature of a term life insurance policy is that it provides coverage for a specified period. This means that the policyholder selects a duration for the coverage—such as 10, 20, or 30 years—during which the policy will pay a death benefit to designated beneficiaries if the insured passes away. Once the term expires, the coverage ends, and the policyholder may or may not have the option to renew or convert the policy to another type of insurance.

This characteristic distinguishes term life insurance from whole life or universal life policies, which are designed to provide coverage for the lifetime of the insured and often have a cash value component. Since term life does not accumulate cash value, it is generally less expensive than permanent life insurance options. Additionally, term policies can sometimes be convertible, allowing policyholders to switch to a whole life policy, but they do not exclusively offer conversion to whole life. The nature of term life insurance as a temporary solution specifically aligns with its purpose of providing financial protection during certain periods of life, such as when raising children or paying off a mortgage.