What is a "term policy"?

What is a "term policy"?

• A. A policy that lasts for the lifetime of the individual
• B. A life insurance policy that provides protection for a specified period
• C. A type of policy that builds cash value over time
• D. A policy that can only be renewed after a health examination

Answer: (B)

A term policy is a type of life insurance that provides coverage for a specified period, often ranging from one to thirty years. This means that the policyholder is insured for that set term, and if they pass away during this time, the beneficiaries receive the death benefit. Term policies are popular because they typically have lower premiums compared to whole life insurance, which offers lifelong coverage and incorporates a cash value component. The focus of a term policy is on providing death benefit protection without accumulating cash value, making it a suitable choice for individuals seeking affordability and straightforward coverage for temporary needs, such as family support or debt repayment. Once the term is over, coverage typically ends unless the policy is renewed, often at a higher premium based on the insured's age at the time of renewal.

A term policy is a type of life insurance that provides coverage for a specified period, often ranging from one to thirty years. This means that the policyholder is insured for that set term, and if they pass away during this time, the beneficiaries receive the death benefit. Term policies are popular because they typically have lower premiums compared to whole life insurance, which offers lifelong coverage and incorporates a cash value component.

The focus of a term policy is on providing death benefit protection without accumulating cash value, making it a suitable choice for individuals seeking affordability and straightforward coverage for temporary needs, such as family support or debt repayment. Once the term is over, coverage typically ends unless the policy is renewed, often at a higher premium based on the insured's age at the time of renewal.