What type of insurance policy offers temporary coverage until permanent insurance is purchased?

Term insurance is designed to provide temporary coverage for a specified period, which can range from one year to several decades, depending on the policy. This makes it particularly appealing for individuals looking for affordable coverage for a limited amount of time, such as when they want to ensure that their dependents are financially secure during a particular phase of life or until they can afford a permanent policy.

The defining characteristic of term insurance is that it does not build cash value like permanent insurance options do, such as whole life or universal life policies. Instead, it serves its primary purpose of providing life insurance protection for a predetermined timeframe, after which the policy expires unless it is renewed or converted to a permanent policy. This is why it effectively suits individuals looking for a temporary solution until they secure a long-term insurance option.

Understanding the differences between these types of policies is crucial, especially in recognizing that while term insurance can provide immediate coverage, it is fundamentally distinct from permanent insurance, which is designed for lifelong coverage and typically includes a savings or investment component.