What is term life insurance and how does it work?

Term life insurance pays a death benefit to your beneficiaries if you die within a fixed term, commonly 10, 20, or 30 years. It builds no cash value, which keeps premiums far below permanent policies, whose premiums often run six to 10 times higher. If you outlive the term, coverage simply ends, though some policies can be converted to permanent insurance. Most policies also include a two-year contestability period, regardless of whether a medical exam was required.