Which type of insurance is characterized by its low cost and no cash value accumulation?

Term insurance is characterized by its low cost and the absence of cash value accumulation. This type of insurance provides coverage for a specific period, known as the term, and is typically more affordable than other forms of life insurance, such as whole life or universal life insurance.

The primary reason for this lower cost is that term insurance only pays a death benefit if the insured passes away during the designated term, and it does not build up any cash value over time. Once the term ends, unless renewed, the coverage stops, which is fundamentally different from whole life insurance, for instance, where premiums contribute to both insurance coverage and savings accumulation through cash value.

The design of term insurance makes it ideal for those looking to secure coverage at an economical price, especially for periods when financial obligations, such as mortgage or children's education, need protection during the term of the insurance.