60. What is the primary feature of increasing term insurance?
Answer: D
Death benefit increases over time
Increasing term insurance is characterized by a death benefit that rises over the term of the policy, providing greater financial protection as time goes on. This feature is particularly beneficial for policyholders who anticipate increased financial responsibilities in the future.
A) Provides a fixed death benefit
This option is incorrect because increasing term insurance specifically offers a death benefit that grows, rather than remaining fixed. A fixed death benefit is more characteristic of level term insurance, where the payout remains constant throughout the policy term.
B) Premiums increase annually
While it is true that premiums for increasing term insurance may rise over time, this statement does not capture the primary feature of the policy. The most significant aspect of increasing term insurance is the escalating death benefit, not the premium structure.
C) Coverage decreases with age
This option is incorrect as increasing term insurance does not involve decreasing coverage. Instead, it guarantees an increasing death benefit, which contrasts with policies that may reduce coverage as the insured ages.
D) Death benefit increases over time
This option is correct as it accurately describes the main feature of increasing term insurance. The death benefit is designed to rise over the policy term, offering enhanced protection for beneficiaries as financial needs evolve.
Conclusion
The primary characteristic of increasing term insurance is that the death benefit increases over time, which directly addresses the growing financial needs of the insured. All other options fail to capture this essential feature, either misrepresenting the nature of the policy or focusing on aspects unrelated to its main benefit.