Final answer:
Term life insurance is considered "pure insurance" because it provides coverage for a specific term without accumulating cash value. It only pays out a death benefit if the insured individual passes away within the specified term.
Step-by-step explanation:
Term life insurance is indeed considered "pure insurance." This means that it provides coverage for a specific term or period, such as 10, 20, or 30 years. Unlike cash-value (whole) life insurance, term life insurance does not have a savings component or accumulate cash value over time.
An example would be if a person purchases a 20-year term life insurance policy with a death benefit of $500,000. If the insured individual passes away within the 20-year term, the beneficiary will receive the $500,000 death benefit. However, if the insured individual survives beyond the 20-year term, the policy will expire, and there will be no payout or cash value accumulated.