Only complex activities can have timeout handlers. If you want a timeout handler in a loop, put the loop into a complex activity and then add the timeout handler to the complex activity.
A timeout ensures that runtime processing of tasks within the complex activity stop after a specified amount of time. If a timeout occurs before all processing within the complex activity ends, the timeout handler is invoked and flow of control is diverted. The activity flow (outside of the normal activity flow) that is connected with the timeout handler defines the processing of activities when timeout occurs.
Note: No rollback of committed activities occurs when a timeout occurs.