Tennessee Life Producer Practice Exam

What type of policy provides coverage for a specified number of years?

1. Permanent Life Insurance

2. Term Life Insurance

3. Universal Life Insurance

4. Whole Life Insurance

The correct answer is: Term Life Insurance

Term life insurance is specifically designed to provide coverage for a specified number of years, which is often referred to as the "term" of the policy. This type of insurance is particularly appealing to individuals who need life insurance for a limited period, such as to cover mortgage payments or to provide for dependents until they reach adulthood. Typically, term policies can span various timeframes – commonly 10, 20, or even 30 years. Coverage is generally straightforward: if the insured passes away during the term, the beneficiaries receive a death benefit. If the insured outlives the term, the coverage ends without any payout. In contrast, other types of life insurance, like permanent life insurance, universal life insurance, and whole life insurance, provide lifelong coverage as long as premiums are paid. They also include a cash value component that grows over time, which is not a feature of term policies. This significant distinction highlights that term life insurance is defined by its temporary nature, making it the correct answer in this context.