The term “ugly duckling” refers to a person that lack of beauty as a child is only temporary. ??
Taken from a story by Hans Christian Andersen, the term “ugly duckling” refers to a person that lack of beauty as a child is only temporary.

Is it a correct sentence?

Question

The term “ugly duckling” refers to a person that lack of beauty as a child is only temporary. ??
Taken from a story by Hans Christian Andersen, the term “ugly duckling” refers to a person that lack of beauty as a child is only temporary.

Is it a correct sentence?

Answer

Almost perfect.  Replace "that" with "whose".  "Whose" replaces his/her/their.  In this case - "their lack of beauty" or "his/her lack of beauty".

"That" replaces "it".  You couldn't say "it lack of beauty".