Connecticut Life Producer Practice exam

What characterizes term life insurance?

1. It builds cash value over time

2. It provides temporary, pure death protection

3. It includes investment components

4. It is renewable without any limits

The correct answer is: It provides temporary, pure death protection

Term life insurance is characterized by its focus on providing temporary, pure death protection. This type of insurance is designed to cover a specific period, usually ranging from one to thirty years, depending on the policy chosen. If the insured individual passes away during this term, the policy pays a death benefit to the beneficiaries. The lack of cash value accumulation distinguishes term life from permanent life insurance policies. The pure death protection offered by term life means that there is no savings or investment component included in the policy. As a result, no cash value builds up over time, which aligns with the essential nature of term insurance – it is intended strictly for providing a death benefit during the term of coverage. This makes it a more affordable option for many people seeking to secure financial protection for their loved ones without the additional costs associated with investment features. While some term life policies may be renewable, this renewal feature is not without limits; therefore, it doesn’t characterize the nature of term life itself. Overall, the defining trait of term life insurance is its focus on providing straightforward death protection for a defined period.