The deal is due to end after the 2013 season, but both the brand and the ECB are open to the possibility of a new sponsor taking over for the 2013 season, which will run from June to August with more than 90 fixtures.
Whether and in what form Twenty20 returns in 2014 depends on a review to be discussed by the ECB board this winter that also includes possible changes to the four-day competition format, sponsored by LV=, and the 40-over format, sponsored by Clydesdale Bank.
Peter Foster, corporate affairs and brand director at Friends Life, said: "We have enjoyed a successful sponsorship of the domestic t20 competition and have been a partner of cricket for many years.
"We are however conducting a review of our sponsorship programme with our agency Generate Sponsorship and this work has identified that the competition audience does not fit with our future customer strategy, although other formats of the game may still provide a relevant association.
John Perera, ECB commercial director, said: "The ECB thanks Friends Life for its support of domestic cricket in recent years. The brand has benefited from significant exposure as the T20 format has continued to grow in popularity with cricket fans. Our search for a new sponsor will begin immediately."
The Twenty20 tournament was launched in 2003 with four sponsors in a system that lasted until 2009.
Friends Provident took the title sponsorship in 2010 and Friends Life was formed in 2011 by a merger of the UK operations of Friends Provident and the life assurance businesses acquired from Bupa and AXA UK.Follow @DanFareyJones