Many people get the phrases “term life insurance” and “whole life insurance” confused. Still others don't really know what it means at all. The key answer to the question, “what is term life insurance?” is given right in its own phrase—the word “term.”
Term life insurance, simply put, is a straightforward policy written out for a number of years—anywhere from 5 years to 30 years long. There are terms available for as short as one year, as well, but the most commonly purchased terms are 10, 20, and 30 years. Additionally, term life insurance does not have an investment component (as seen in whole life insurance).
Essentially, term life insurance is a relatively inexpensive way to get a death benefit for those left behind (termed the “beneficiary”). There is no complicated investment component or estate tax component. It is very simple: purchase a policy for a certain amount of time, and, should the insured die prior to the expiration of the policy, the beneficiary will be paid the predetermined death benefit.