When is protection provided by a term insurance policy?

A term insurance policy is designed to provide coverage for a specific duration, or "term," which is specified in the insurance contract. The primary purpose of this type of insurance is to offer a death benefit to the beneficiaries if the policyholder passes away within that set period. If the policyholder survives beyond the term of the policy, the coverage ends, and no benefit is paid out.

This characteristic makes the first choice correct, as the protection and financial coverage are active only during the defined term of the policy. Term insurance does not offer any cash value accumulation or benefits beyond the specified period. Upon expiration without renewal or conversion, the policyholder has no ongoing protection.

Other options suggest ongoing coverage beyond this term, either for the policyholder's lifetime or tied to a retirement age, which deviates from the fundamental nature of term insurance. Additionally, stating that protection lasts only during renewable periods does not accurately reflect that the coverage can be renewed but does not extend the core intent of term insurance, which is limited to a specific duration.