What is the primary characteristic of a life insurance policy?

The primary characteristic of a life insurance policy is that it provides immediate benefits upon death of the insured. This means that when the policyholder passes away, the beneficiaries receive a predetermined amount of money, known as the death benefit. This benefit is typically paid out quickly to help cover immediate financial needs, such as funeral expenses, debts, or ongoing living expenses for the beneficiaries.

In contrast, while some life insurance policies may have a cash value component, not all do; term life insurance, for instance, does not accumulate cash value. The idea of having an expiration date applies mostly to term life insurance, which is designed to provide coverage for a specific period. Lastly, a life insurance policy is fundamentally different from health insurance, which focuses on reimbursing medical expenses rather than providing a death benefit. Therefore, the defining trait of life insurance is its provision of financial security to beneficiaries upon the policyholder's death.