term life insurance

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A life insurance policy whereby the insured purchases coverage lasting for a specific period of time. The designated beneficiary collects the proceeds only if the insured dies within the specified term. There is no investment component to the policy, so the insured cannot surrender the policy for cash value during his or her lifetime. Usually, as the insured ages and the risk of death increases, either the premium amount increases or the amount of insurance coverage decreases. Also termed term policy.