AD Banker Comprehensive Practice Exam

What type of insurance policy typically involves lower face amounts and is often written on an industrial basis?

1. Whole life insurance

2. Term life insurance

3. Industrial life insurance

4. Universal life insurance

The correct answer is: Industrial life insurance

The correct answer is industrial life insurance because this type of policy is specifically designed for lower face amounts and is often issued in smaller increments that make it more accessible to individuals who may not be able to afford larger policies. These policies are typically underwritten and serviced in a manner that accommodates the working class, aligning with the industrial basis mentioned in the question. This approach allows for the policies to be issued at a lower premium, generally paid weekly or monthly, which fits with the earning schedules of many industrial workers. Whole life insurance generally involves higher face amounts and provides coverage for the insured's entire lifetime, with a savings component that builds cash value over time. Term life insurance provides coverage for a specific period and usually has higher face amounts, making it less applicable to the context of lower face amounts. Universal life insurance is a type of permanent life insurance that combines a death benefit with a cash value component and offers flexible premium payments, often resulting in larger face amounts than those typically found in industrial life insurance.