Washington Life Producer Practice Exam

What remains constant over the duration of a 10-year level term life insurance policy?

1. The face amount and premium

2. The cash value

3. The insured’s health status

4. The policy's interest rate

The correct answer is: The face amount and premium

In a 10-year level term life insurance policy, the face amount and premium are the features that remain constant throughout the policy's duration. This means that the sum insured (the face amount) does not change, ensuring that the beneficiaries will receive the same amount upon the insured's death within that 10-year period. Additionally, the premium remains fixed for the entire term, making it easier for policyholders to budget for their insurance costs. Cash value is not applicable in term life insurance policies, as these policies are designed solely to provide death benefit coverage without accumulating any savings or investment component. The insured's health status can change over time, which would not affect the terms of an existing policy but could be relevant for new coverage. The policy's interest rate also does not apply here because term life insurance does not involve cash value accumulation that generates interest. Thus, the face amount and premium being constant is a key characteristic of a level term life insurance policy.