Tennessee Life Producer Practice Exam

What type of policy would usually provide a premium rate based on the age of the insured at renewal?

1. Whole Life Insurance

2. Renewable Term Policy

3. Universal Life Insurance

4. Variable Life Insurance

The correct answer is: Renewable Term Policy

A renewable term policy typically offers coverage that can be renewed without requiring proof of insurability, and the premium for the new term is calculated based on the insured's age at the time of renewal. This means that as the insured ages, the premium rate will increase at each renewal point due to the higher risk associated with older age. This characteristic distinguishes it from whole life, universal life, or variable life insurance policies, which have different structures regarding premium payments and age considerations. Whole life insurance generally involves a level premium throughout the insured's lifetime, regardless of age at renewal, while universal and variable life policies also offer flexible premiums that are not strictly tied to the age of the insured upon renewal. Thus, the correct identification of a renewable term policy aligns directly with the provision of premium rates that change based upon the age of the insured at the time they choose to renew the policy.