What does term insurance provide coverage for?

Term insurance provides coverage for a specified period of time, which is one of its defining characteristics. When a policyholder purchases term insurance, they choose a term length, such as 10, 20, or 30 years, during which the policy remains active. If the insured person passes away during this specified term, the beneficiaries receive the death benefit. If the term expires and the insured is still alive, the coverage ends, and there is typically no payout. This time-limited nature distinguishes term insurance from whole life insurance or universal life insurance, which provide coverage for the lifetime of the insured and often build cash value over time. Understanding the finite aspect of term insurance helps individuals make informed decisions about their life insurance needs based on their financial situations and goals.