Types and Features of Life Insurance Quiz

Term life insurance provides coverage for a specific term, typically offering lower premiums compared to permanent life insurance.

Universal life insurance offers flexibility in premium payments and coverage adjustments, allowing policyholders to adapt to changing financial circumstances.

Term life insurance provides coverage for a predetermined period, offering a simple and affordable option for temporary needs.

Permanent life insurance allows policyholders to adjust premium payments according to their financial situation, providing flexibility over time.

Whole life insurance features fixed premiums throughout the policy's duration, whereas universal life insurance offers flexibility in premium payments, allowing policyholders to adjust coverage and premiums.

Cash value is the amount of money a policyholder receives upon surrendering their life insurance policy.

Term life insurance is not considered permanent; it provides coverage for a specific term rather than the insured's entire life.

Whole life insurance provides coverage for the insured's entire life with fixed premiums and an accumulated cash value, whereas term life insurance offers coverage for a specified term with flexible premiums and no cash value.

Failure to pay premiums results in the lapse of the policy, leading to termination of coverage.

The grace period is a specified duration after a missed premium payment during which the policy remains in force, allowing the policyholder to make the payment without losing coverage.

Underwriting involves evaluating an applicant's risk profile to determine their insurability and appropriate premium rates.

The death benefit ensures financial protection for the policyholder's beneficiaries upon the insured's death.

The incontestability clause prevents the insurer from contesting the validity of the policy or denying claims after a specified period, typically two years from the policy's issuance.

Premiums in variable life insurance are invested in various investment options such as stocks, bonds, or mutual funds, allowing policyholders to potentially earn higher returns but also subject to market risks.

The accidental death benefit rider provides additional coverage if the insured's death results from an accident, offering extra financial protection to beneficiaries.