Florida 2-15 Life, Health and Variable Annuity AgentGeneral Knowledge of Life InsuranceEasy
A client is 30 years old and wants to purchase a life insurance policy that offers the lowest initial premium while providing coverage for a specific period. Which type of policy would best suit their needs?
- ATerm Life
- BWhole Life
- CUniversal Life
- DVariable Life
Show answer & explanationAnswer & explanation
Correct answer: A. Term Life
Term life insurance offers the lowest initial premiums because it provides coverage for a specific period and does not build cash value. It is ideal for temporary needs or when budget is a primary concern.
Why the other options are wrong
- B. Whole life insurance has higher initial premiums due to its cash value component and lifelong coverage.
- C. Universal life insurance offers flexibility but typically has higher initial premiums than term life due to its cash value component.
- D. Variable life insurance involves investment risk and generally has higher premiums than term life due to its cash value and investment features.
Term Life Insurance
Life insurance that provides coverage for a specific period, or 'term,' and does not build cash value. It typically has the lowest initial premiums.
- Temporary coverage
- No cash value
- Lowest initial premiums
Memory trick: Temporary shield, lasting peace.