The two principal characteristics of term insurance are: (1) the insured must die for any benefits to be paid; and (2) by definition, the contract expires at the end of the term. Stated more specifically, a term life insurance policy promises to pay a death benefit to a beneficiary only if the insured dies during a specified term.
The contract makes no promise to pay anything if the insured lives beyond the specified term. Generally, no cash values are payable under a term life insurance contract. If the insured survives the specified term, the contract expires and provides no payment of any kind to the policyowner.
Reproduced with permission. Copyright The National Underwriter Co. Division of ALM