Which Of The Following Best Describes Term Life Insurance?

Before going to describe which of the following best describes the term life insurance, let’s discuss why we need term coverage usually!  Our life is full of uncertainty. A conscious man has to be a responsible person. Also, the responsible person should ensure the safety and financial well-being of the loved one. So to meet all such demands, term coverage could be a great means! Besides, term insurance is straightforward and cost-effective. Even more, it is a protection for a specific period.

In this article, we will explore which of the following best describes term life insurance.

Which of the following best describes term life insurance?


  1. The insured may lend or collect the policy’s cash value.
  2. The insured pays a premium for a set period.
  3. The premium is paid by the insured until death.
  4. The insured gets coverage for the rest of his or her life.

The correct response is:

  1. The insured pays a premium for a set period.

Explanation of the Answer:

A term life insurance policy protects the insured for a specified length of time in exchange for a premium. Therefore, a term life policy offers cheaper rates than a permanent policy because it only covers the insured for a short time. The period might last anything from one to thirty years. Beneficiaries of an insurance policy receive death benefits if the insured dies during the policy’s term, but no payout is provided if the policy expires before the insured dies.

Term life insurance may be useful for those who have financing, loans, or other debts that they want to cover in the case of their untimely death because it provides cheap coverage for a set period. It can also be advantageous for parents of small children who want to ensure that their kids will be financially stable until they get old enough to support themselves. Term life insurance can also help businesses that want financial protection in the event of a death.

Another benefit of term life insurance is that the rates are often fixed for the entire time. The policyholder will not have to worry about their rates rising abruptly if they choose the level of coverage that they want. The cost of premiums will adjust based on the amount selected by the policyholder.

How Term Life Insurance Works

A basic and reasonably priced kind of life insurance coverage, term life insurance covers you for a certain amount of time (referred to as the “term”). Term life insurance is usually available in 10, 15, 20, or 30-year options. Your beneficiaries will get a policy payout in the set amount of coverage if you pass away during the term. For instance, if you get a $500,000 policy with a 20-year term, your insurance company will pay your beneficiaries half a million dollars (the policy’s value) if you pass away during that time. It is that easy.

The basic need of providing a death benefit to those you love is met by both term and permanent insurance. “Term” provides that coverage throughout the length of your policy’s term. “Permanent” life insurance has a cash value component that can rise over time and covers you for the remainder of your life. Many families who are concerned about their finances may be discouraged by the fact that permanent insurance is far more expensive than term ones.


For many reasons, you might want to think of permanent life insurance if you can afford higher rates and are searching for a cash accumulation feature. Though term life insurance may appeal to you if you’re young, healthy, and searching for straightforward, reasonably priced coverage during the years you could need it most. Stay safe and secure your financial health.

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