Which statement best describes a term policy?

• A. Term policies provide pure protection for a specified period.
• B. Term policies guarantee cash value.
• C. Term policies have level premiums that never change.
• D. Term policies accumulate cash surrender values.

Answer: (A)

Term life insurance is designed to provide pure death protection for a defined period. It pays a death benefit only if the insured dies during that term and does not build any cash value or savings inside the policy. That lack of a cash value is the defining feature of term policies, which is why the statement describing them as providing pure protection for a specified period is the best choice.

The other statements imply features that term policies don’t have. They do not accumulate cash surrender values or cash value, so those aspects aren’t part of a term policy. While some term policies may have level premiums during the term, the most important point is the absence of cash value, not a guaranteed premium behavior across all scenarios. After the term ends, the policy generally expires or may be converted or renewed at a new, typically higher premium.