The death benefit is only payable if death occurs during the agreed-upon term. If the insured survives the time period, the policy expires. This means it has no cash value. However, some policies have a convertible feature permitting a policyowner to exchange a term policy for a cash value policy without evidence of insurability. Term is basically designed to provide a maximum amount of protection for a temporary period of time.
Term is sold in a variety of forms and for a variety of purposes.
The most common type is Level Term. Decreasing Term is another version of term insurance. It is generally sold with a level premium and a decreasing death benefit. A variation of decreasing term is Mortgage Life Insurance. This is designed to decrease at the rate in which a mortgage balance decreases.