Coverage for a fixed number of years, at a premium that doesn't move. When the term ends, so does the policy. That single sentence is most of what there is to know.
How it works
You choose an amount and a length — commonly ten, twenty, or thirty years. If you die during those years, the policy pays that amount to the beneficiaries you named, subject to the terms of the contract. If you outlive it, nothing is paid and nothing is returned. Death benefits are generally not treated as taxable income, but I am not a tax advisor and your situation may differ — ask yours.
That expiry is the reason it costs a fraction of permanent coverage. It is also the reason the length matters more than most people expect: the term should outlast the obligation you bought it for.
Picking the length
10 years
A short bridge — a business loan, the last stretch of a mortgage, a gap before other coverage begins.
20 years
The common answer for a family with young children. Long enough to carry the household to the far side of college.
30 years
A thirty-year mortgage taken in your thirties, or a late-arriving second family. Costs more, and removes the question.
At a glance
Compare the options.
Scroll horizontally to compare all three options.
Comparison of term life, whole life, and indexed universal life insurance
Policy feature
Term
Whole
IUL
Lasts
10–30 years
Lifetime
Lifetime, if funded
Premium
Level, lowest
Level, highest
Adjustable
Cash value
None
Guaranteed, slow
Index-linked, capped
Needs watching
At renewal
Rarely
Yearly
A summary, not a quote. Actual features, costs, and guarantees are set by the carrier and the policy you're issued.