In a Term Life Assurance policy, the sum assured (the principal amount of the policy) is payable if the life assured dies within the duration of the policy. The policy duration is for a specified length of time, usually a short period of time. The period of cover for the life assured is restricted to the duration of the policy and no sum assured is paid if the assured did not die within the policy period. There is no investment element in term life assurance.

Term life assurances can be for an individual or a group of individuals and may either cover life assurance benefits or health benefits or both.

Term assurance policies may be used as collateral security for loan transactions and also life protection and offer significant advantages over other life assurance policies, including their substantially lower costs, the freedom to select the length of the coverage and the ability to secure only the level of coverage necessary to meet specific needs and time-sensitive obligations.