Term life insurance is a type of temporary life insurance. The purpose of term life insurance is to reduce financial risk for a fixed period usually between one to twenty years. One example will make things clear. If you buys a life insurance policy to insure your children life. You pays $20 premium per month to the life insurance company. The period of life insurance is for 20 years. So if your children's dies within 20 years, you will get 4800 dollars. However if children doesn't die within 20 years Sarah will get some money after 20 years which will be much less compared to 4800 dollars.
The idea behind term life insurance is to buy a life insurance policy for a period usually one year. The premium is much less compared to a permanent life insurance premium. The insurance can be renewed after the expiry of the life insurance term, but the premium keeps increasing as the insured ages. The higher the age of the insured, the higher is the premium.
Term life insurance is the cheapest life insurance available on coverage to premium dollar basis. The death benefit is non-taxable in the United States and the premium is also deductible from the income to save income tax.