Washington Life Producer Practice Exam

What type of life insurance provides coverage for a specified period and pays out only if the insured dies within that period?

1. Whole life

2. Term life

3. Universal life

4. Endowment policy

The correct answer is: Term life

Term life insurance is designed specifically to provide coverage for a predetermined period, which can range from a few years to several decades. The primary characteristic of term life is that it offers a death benefit that will be paid out only if the insured passes away during the specified term of the policy. If the insured survives beyond that period, the coverage expires without any payout, making it a cost-effective option for many individuals seeking to provide financial protection for their families, especially during critical years such as when children are young or debts are high. Whole life insurance, in contrast, is structured to provide coverage for the entirety of the insured's life, as long as premiums are paid, and it includes a savings component that builds cash value over time. Universal life also provides lifelong coverage but offers more flexibility in terms of premium payments and death benefits. An endowment policy typically combines a life insurance product with a savings plan and pays out either upon death or at the end of a specified term, which does not align with the characteristics of term life insurance. This makes term life the clear choice when the requirement is to pay out only in the event of the insured's death during a specified period.