What characterizes term life insurance?

Term life insurance is characterized by providing coverage for a specified period, which is often in years, such as 10, 20, or 30 years. This type of insurance is designed to offer a death benefit to the beneficiaries if the insured passes away during the term of the policy.

One of the main advantages of term life insurance is that it typically comes with lower initial premiums compared to permanent life insurance options. This makes it more accessible for individuals seeking affordable coverage. The premiums are usually fixed for the length of the term, and once the term expires, the coverage ends unless it is renewed or converted to a different type of policy.

The other choices describe characteristics of different types of life insurance. For example, covering one's entire life with a cash component refers to permanent life insurance, which builds cash value over time. The suggestion of accumulating dividends pertains to participating policies in whole life insurance, while the idea of only paying in case of accidental death aligns with accidental death and dismemberment insurance rather than traditional term life coverage.