A term life insurance policy is a straight-forward product where a person pays monthly premiums in exchange for a guaranteed death benefit. It is called a "term" policy because it covers the insured person for a certain amount of time, often 10 to 30 years.
The basic premise of a term policy is that a covered person secures financial stability for surviving members following an unexpected death. Unlike a whole life plan, a term policy expires after the term is up. In some cases, policyholders have options to extend or replace term policies after expiration. Premiums are based on the benefit, age and health of the insured.