Which type of life insurance policy pays out upon the insured's death?

Term life insurance is a type of life insurance policy specifically designed to provide coverage for a predetermined period, or "term." In the event of the insured's death during that term, the policy pays a death benefit to the beneficiaries. This straightforward nature is what makes term life insurance a popular choice for individuals looking for temporary coverage to protect their loved ones financially, particularly during critical years such as when children are dependent or when there are significant debts.

Whole life and universal life insurance are also forms of life insurance but have an investment component and do not solely focus on providing death benefits. While they do pay out upon the insured's death, they typically cover the insured for their whole life or provide flexible premium options, which can complicate the decision compared to the simplicity of a term policy. Annuity contracts, on the other hand, are not life insurance policies; they are financial products meant to provide income, typically during retirement, and do not pay out a death benefit in the same manner as life insurance policies.