Massachusetts Life Producer Practice Exam

What distinguishes level term insurance from other types of term insurance?

1. Premiums increase annually.

2. Coverage duration is fixed at 20 years.

3. Death benefit remains the same throughout the term.

4. Cash value accumulates during the term.

The correct answer is: Death benefit remains the same throughout the term.

Level term insurance is characterized by a death benefit that remains constant throughout the entire term of the policy. This means that regardless of when the insured individual passes away during the term, the beneficiaries will receive the same amount of money as stated in the policy. This feature provides a sense of predictability and assurance for policyholders, as they know what to expect in terms of coverage. In contrast, other types of term insurance may have different structures, such as increasing premiums or varying death benefits. For example, policies that have death benefits increasing over time or those that are renewable with increasing costs do not provide the same stability that level term insurance offers. Additionally, many term policies do not accumulate cash value, which is a feature generally associated with whole life or universal life insurance, not term insurance.