How Does Term Life Insurance Work? 
Term life insurance takes all the premiums you pay for your policy , and applies it toward `` pure '' life insurance protection . That means that the only purpose of the policy is to pay your beneficiary upon your death -LRB- assuming you are the insured person -RRB- . Period . Permanent insurance charges more so that the policy can accumulate cash value , possibly pay dividends , and -LRB- usually -RRB- stay in effect for the rest of your life . Term life insurance does not do any of those things . It charges the least possible amount so that your beneficiary will receive a death benefit if you pass away within a certain number of years . 