AD Banker Comprehensive Practice Exam

What is an example of a common characteristic of term life insurance?

1. It builds cash value

2. It has a level premium for the term of coverage

3. It is renewable up to a certain age

4. It provides lifelong benefits

The correct answer is: It is renewable up to a certain age

Term life insurance is primarily characterized by its temporary nature, which means it provides coverage for a specified period, or "term." One of the common features of term life insurance is that it is renewable, typically allowing the insured to renew the policy after the initial term ends. However, this renewal often comes with certain conditions, such as being restricted to a maximum age limit at which renewal is allowed. This characteristic highlights the flexibility of term life insurance policies, as they can be extended to accommodate the insured's need for coverage over a longer period. Unlike whole life insurance or universal life insurance, term policies do not build cash value or provide lifelong benefits, and their premiums may not remain level throughout the policy's duration, depending on the type of term insurance purchased. Overall, the renewable feature up to a certain age is a key aspect that distinguishes term life insurance from other types of policies, making it a valuable consideration for those seeking temporary insurance coverage.