What does a term life insurance policy guarantee?

A term life insurance policy guarantees coverage for a specified term, such as 10, 20, or 30 years. This means that if the insured passes away during this period, the beneficiaries will receive the death benefit as specified in the policy. If the insured survives beyond the term, the coverage ends, and no benefits are paid out.

This characteristic is a fundamental aspect of term life insurance, distinguishing it from whole or permanent life insurance, which offers lifelong coverage and may also include a cash value component. By focusing on pure insurance protection for a defined period, term life policies cater to individuals seeking temporary financial security for their dependents or particular financial obligations, such as a mortgage.

The other options do not accurately depict the primary guarantee provided by a term life policy. For example, payment of benefits upon policy expiration is not accurate since benefits are only paid if the insured dies within the term, and there is no investment growth or guaranteed renewability without additional terms being included in the policy.