Question 18

Term life insurance provides temporary protection.

Term life insurance is designed to offer coverage for a specified period, typically ranging from one to thirty years, and pays a death benefit only if the insured passes away during that term.

A) It usually provides a cash value

This statement is incorrect as term life insurance does not accumulate cash value over time. Unlike whole life or universal life policies, term life is purely protection-based and does not offer any investment component.

B) It provides temporary protection

This statement is accurate because term life insurance is specifically intended to provide coverage for a limited duration. Once the term expires, the policy does not pay out unless renewed or converted to a permanent policy.

C) It may be written only for periods of five years or less

This option is misleading because term life insurance can be issued for various terms, typically ranging from one year to thirty years or even longer. Therefore, it is not limited to five years or less.

D) It usually can be renewed at the same premium

This statement is generally incorrect. While many term life policies offer renewal options, the premium may increase upon renewal based on the insured's age and health status at the time of renewal.

Conclusion

Option B is definitively correct as it accurately describes the nature of term life insurance, which is intended to provide temporary coverage. The other options either misrepresent the features of term life insurance or incorrectly state its limitations, reinforcing that only option B aligns with the fundamental characteristics of this type of policy.