Term life insurance provides only a death benefit, designed to cover financial obligations of the insured, such as debt, dependents' care, children's education, funeral costs, and mortgages.

This insurance lasts for a predetermined period. Once it ends, the insured can either let the policy expire or renew it at higher premiums. If the insured dies during the term, the beneficiary is paid the death benefit. Term insurance offers an affordable way to secure a substantial death benefit relative to the premium cost.

Similar to other insurance types, term life ensures payout for claims as long as premiums are paid and the policy remains active, without premium return if there are no claims. For example, car insurance covers accidents, while home insurance protects against events like fires or theft. The occurrence of such risks is uncertain, and ceasing coverage (e.g., by selling the insured asset) does not result in a premium refund. The purpose is solely risk protection.