Which of the following is characteristic of term life insurance?

Asked by: Ila Schiller II  |  Last update: February 11, 2022
Score: 4.1/5 (64 votes)

All of the following are characteristics of term insurance, EXCEPT: Term policies do not accrue cash value. They only provide death protection. Premiums increase as the policy is renewed, and the death benefit is only paid out if the insured dies during the policy term.

What are the characteristics of level term insurance?

Features of a Level Term Policy. Premiums Don't go up or Down. Death Benefit Stays the Same. The Coverage Expires.

Which of the following is a downside of term life insurance quizlet?

Disadvantages of term insurance are: premiums that increase and become unaffordable in later years. the need for coverage may exist after the policy expires. no cash value accumulates during the policy period.

What does term life insurance do?

Term life insurance, also known as pure life insurance, is a type of life insurance that guarantees payment of a stated death benefit if the covered person dies during a specified term.

What are the characteristics of whole life insurance?

Compared to other forms of permanent coverage, a whole life policy has three defining characteristics:
  • The level premium remains the same for life.
  • The death benefit is guaranteed as long as the guaranteed premiums are paid. ...
  • The policy includes guaranteed cash values that grow at a guaranteed rate.

characteristics of term life insurance

33 related questions found

What is whole life and term life insurance?

Life insurance provides financial protection after you die. ... Term life lasts a set amount of time, usually between 10-30 years. Whole life insurance is a type of permanent life insurance that lasts your entire life. Term life is usually more affordable, while whole life can build a cash value.

Which of the following is not characteristic of whole life insurance?

All of the following is NOT a characteristics of whole life insurance: The cash value in a permanent life insurance policy is not a nonforfeiture benefit. ... Cash value may be used as a policy loan, without affecting the death benefit.

What are the terms used in insurance?

Life Insurance Terms You Should Know
  • Policyholder: The policyholder is the one who proposes the purchase of the life insurance policy and pays the premium (see #7 Premium). ...
  • Life assured: ...
  • Sum assured (coverage): ...
  • Nominee: ...
  • Policy tenure: ...
  • Maturity age: ...
  • Premium: ...
  • Premium payment term/mode/ frequency:

What is meant by term insurance?

Term insurance is the simplest and purest form of life insurance. It provides financial protection to your family at the most affordable rates. ... The benefit amount is paid out to the nominee in case of death of the person insured during the term of the policy.

What is level term life insurance?

What is level term life insurance? Level term life insurance is a type of term life insurance, which covers you for a specific period of time, typically 10 to 30 years. ... “Level term” simply means that your premiums, or payments, and death benefit stay the same throughout the entire policy.

Which of the following is a downside of term life insurance?

One of the major disadvantages of term insurance is that your premiums will increase as you get older. When you buy term life in your 20s or 30s, it will be much cheaper compared to when you need to renew your policy later on in your 50s or 60s.

In which of the following ways does term life insurance and whole life insurance differ?

Term life is “pure” insurance, whereas whole life adds a cash value component that you can tap during your lifetime. Term coverage only protects you for a limited number of years, while whole life provides lifelong protection—if you can keep up with the premium payments.

Which of the following features of term insurance allows the policy to be renewed at the end of a specified period without evidence of insurability?

Most term policies include a conversion option that guarantees policyowners the right to convert the policy to permanent protection without having to provide evidence of insurability."

What is renewable term life insurance?

With a renewable term life insurance policy, coverage can be renewed without a medical exam when your term expires. ... Unlike a level term life insurance policy, each time you renew (usually at the end of a year) your premium will go up based on your new age.

What is a 10 year term life insurance policy?

What is a 10 year term life policy? A 10 year term life insurance policy has a level (unchanging) premium and a specific death benefit. As long as premiums are paid, your coverage will remain in tact. ... Once you reach the end of the policy term, the policy ends. Some policies can be renewed with a higher premium.

What is a 5 year level term policy?

A 5 year term life insurance policy is a plan that covers the insured for 5 years. It is one of the shortest term policies out there, after annual renewable term policies. ... Like most term insurances, the policyholder of a 5 year term may have the option to convert their policy once it expires.

What is term life insurance in India?

WHAT IS TERM LIFE INSURANCE? Term insurance is a type of life insurance that provides coverage for a specific period of time or years, i.e., a term. This type of life insurance provides a financial benefit to the nominee in case of the unfortunate demise of the insured during the policy term.

What are the 3 types of life insurance?

There are three main types of permanent life insurance: whole, universal, and variable.

What are the terms and conditions of an insurance policy?

Claims in a term insurance can be availed when the life insured passes away and his beneficiary claims the sum assured. After the internal formalities have been completed, the insurer pays the sum assured to the nominee as prescribed in the policy.

What are the characteristics of endowment policy?

Features of Endowment plans

The unique feature of endowment plans is that they guarantee1 benefits upon maturity. On completion of the tenure of the policy, the policy holder receives the sum assured as the maturity benefit. Premium payment: Usually, the premium payment frequency can be selected as per comfort.

What are the 4 types of life insurance?

The Four Major Types of Life Insurance
  • Term Life Insurance.
  • Whole Life Insurance.
  • Universal Life Insurance.
  • Variable Life Insurance.

Which of the following is not a true characteristic of permanent protection whole life?

Which of the following is not a true characteristic of permanent protection Whole Life? Flexible premiums are not a characteristic of a Whole Life Insurance Policy. A decreasing term policy has a death benefit that reduces over a defined number of years, but the premium remains the same in all years.

What is Direct term life?

Direct term is a kind of term life insurance policy, which covers you for a specific length of time (usually 10 to 30 years). If you die while the policy is active, your family receives a cash payout based on your coverage amount that they can use to cover any short- or long-term financial needs.

What is better term or whole life?

Term life coverage is often the most affordable life insurance because it's temporary and has no cash value. Whole life insurance premiums are much higher because the coverage lasts your lifetime, and the policy grows cash value.