Which of the following best describes a term life insurance policy?

A term life insurance policy is designed to provide coverage for a specified period of time, which is typically from one to thirty years. The key characteristic that distinguishes term life insurance is that it offers a death benefit only if the insured passes away during that designated term. If the insured does not die within that period, the coverage simply expires without any payout.

This type of policy is often chosen for individuals who need life insurance for a specific timeframe, such as when raising children or paying off a mortgage. Unlike permanent life insurance options, term life does not accumulate cash value and is generally more affordable, making it an appealing choice for many policyholders looking for financial protection without long-term commitments.

In contrast, options that mention permanent coverage, cash value accumulation, or annual renewable premiums do not accurately depict the fundamental nature of term life insurance. Permanent coverage implies lifelong protection with a cash value component, which is not applicable to term policies.