What is a common characteristic of a term life insurance policy?

A common characteristic of a term life insurance policy is that it provides coverage for a specified period. This type of insurance is designed to cover the policyholder for a determined duration, which can range from a few years to several decades, depending on the terms of the policy. If the policyholder passes away within that designated time frame, the death benefit is paid out to the beneficiaries. However, if the term expires and the policyholder is still alive, there is no payout, and the coverage ends unless it is renewed or converted to a permanent policy.

The other choices refer to features typically found in different types of insurance policies. For instance, accumulating cash value is a characteristic of permanent life insurance, not term life. Similarly, paying dividends is generally associated with participating whole life policies, which are based on the insurer's financial performance, rather than term life insurance, which does not pay dividends. Guaranteed insurability is a provision that may be included in some term policies but is not a defining characteristic of term life itself; rather, it allows a policyholder to purchase additional coverage later without needing to provide evidence of insurability.