What is one main characteristic of term life insurance?

Term life insurance is characterized primarily by its provision of coverage for a specified period. This means that the policy is effective only for a predetermined term, which could range from a few years to several decades, depending on the terms agreed upon at the time of purchase. During this period, if the insured individual passes away, the beneficiaries will receive the death benefit stated in the policy.

Unlike whole life or universal life insurance, term life does not build cash value over time, which eliminates the need for a cash value component. Additionally, term policies do not accumulate dividends as they are typically not participating policies; they simply provide a straightforward death benefit without the complexities of cash accumulation or investment returns.

While some term policies may offer options to renew after the term expires, it’s important to note that this is not universal, and some may not offer renewability. Thus, the defining feature remains its focus on providing coverage for a limited time rather than the lifelong protection or cash value options found in other types of life insurance.