Legal Definitions - term policy

Definition: A type of life insurance policy that provides coverage for a specific period of time, but does not have a cash value or reserve value.

Examples: If someone buys a 10-year term policy, they will be covered for 10 years. If they die during that time, their beneficiaries will receive a death benefit. However, if they outlive the policy, it will expire and they will not receive any money back.

Explanation: Term policies are a popular choice for people who want to provide financial protection for their loved ones during a specific period of time, such as while their children are young or while they are paying off a mortgage. The examples illustrate how a term policy works and the limitations of this type of insurance.