Which of the following describes a life insurance policy that has the lowest premium?

Term life insurance is characterized by having the lowest premiums among the various types of life insurance policies. This is primarily because term life insurance provides coverage for a specified period, such as 10, 20, or 30 years, and pays a benefit only if the insured dies within that term. It does not build a cash value, which is a feature of some other types of life insurance, such as whole life and universal life insurance.

Since term life insurance offers pure protection with no savings component, the premiums are significantly lower compared to whole life, which includes both insurance coverage and a cash value accumulation, or universal life, which has flexible premiums and death benefits but generally involves higher costs due to its investment component. Endowment insurance, which pays a benefit either at the end of a specified period or upon death, typically has higher premiums as well because it combines elements of life insurance and savings.

Thus, for individuals seeking affordable coverage purely for the risk of death during a set period, term life insurance is the most cost-effective choice.