Which statement best describes term life insurance?

Which statement best describes term life insurance?

• A. Provides lifetime coverage with cash value
• B. Provides coverage for a specified term and does not accumulate cash value
• C. Builds cash value over time
• D. Premiums increase over time

Answer: (B)

Term life insurance provides coverage for a specified term and does not accumulate cash value. It pays a death benefit if the insured dies during that term; if the term ends or the insured survives, there is no payout and no savings component. This makes it a pure protection option—affordable coverage designed for temporary needs like income replacement or a mortgage. Permanent life policies, such as whole life, provide lifelong coverage and build cash value, which is why statements about lifetime coverage or cash value don’t describe term life. While some term policies may have renewal options that increase premiums at the end of the term, the hallmark of term life is fixed coverage for a defined period with no cash value buildup.

Term life insurance provides coverage for a specified term and does not accumulate cash value. It pays a death benefit if the insured dies during that term; if the term ends or the insured survives, there is no payout and no savings component.

This makes it a pure protection option—affordable coverage designed for temporary needs like income replacement or a mortgage. Permanent life policies, such as whole life, provide lifelong coverage and build cash value, which is why statements about lifetime coverage or cash value don’t describe term life. While some term policies may have renewal options that increase premiums at the end of the term, the hallmark of term life is fixed coverage for a defined period with no cash value buildup.