Which option provides cash payout to beneficiaries upon death, based on the selected coverage amount?

Term insurance is designed specifically to provide a cash payout, known as a death benefit, to designated beneficiaries when the insured individual passes away within the term of coverage. This payout amount is predetermined based on the coverage amount selected at the outset of the policy.

Term insurance typically has lower premiums compared to permanent life insurance options because it only covers a set period, usually ranging from 1 to 30 years, and does not accumulate cash value over time. The simplicity and clarity of its function make it a straightforward choice for individuals seeking financial protection for their loved ones in the event of an unexpected death.

Other insurance types, such as whole life, universal life, and variable life insurance do indeed provide a death benefit, but they also include an investment component or cash value accumulation feature. These aspects can complicate their benefits compared to the straightforward payout option that term insurance provides. Thus, for those specifically looking for a cash payout upon death based solely on the coverage amount without additional features, term insurance is the fitting choice.