What is one of the key characteristics of term life insurance?

Term life insurance is characterized by its cost-effectiveness when compared to permanent insurance options. This is primarily due to its structure, which provides coverage for a specified period—typically 10, 20, or 30 years—without the additional benefits associated with permanent policies, such as cash value accumulation or lifetime coverage. Because term policies are designed purely for protection and do not include investment components or cash value, they tend to be much less expensive, making them an attractive option for individuals seeking affordable life insurance coverage for a certain timeframe.

This distinction allows policyholders to receive a substantial death benefit for a lower premium, catering to those who may not need lifelong coverage or prefer to allocate their financial resources differently. The other options refer to features that are characteristic of permanent insurance policies, which include cash value accumulation, lifetime coverage guarantees, and investment opportunities in accounts associated with bonds and stocks.