Rhode Island Life Insurance Practice Exam

Which type of life insurance can be selected for increasing coverage over time?

1. Whole life

2. Decreasing term

3. Universal life

4. Term life

The correct answer is: Universal life

The choice of universal life insurance as the correct answer is justified by its inherent flexibility in adjusting coverage over time. Universal life policies allow policyholders to customize the death benefit and premium payments, providing the opportunity to increase the level of coverage as their financial needs or circumstances evolve. This feature is particularly advantageous for individuals whose insurance needs might change due to various life events such as marriage, having children, or purchasing a home. The adjustable nature of universal life policies makes them suitable for those seeking a progressive approach to life insurance that can adapt to their life stages. In contrast, whole life insurance offers a fixed death benefit and does not allow for increases in coverage without additional policy modifications. Decreasing term life insurance is structured to provide a declining death benefit over the policy term, which does not support any increase. Term life insurance typically provides level coverage for a specific period and is designed for temporary needs, without the capacity for adjusting the coverage amount after the policy is issued. Each of these other types does not offer the same level of flexibility and customization as universal life, making it the most appropriate choice for increasing coverage over time.