Rhode Island Life Insurance Practice Exam

Which type of policy provides a temporary coverage that lasts for a specific term?

1. Universal Life

2. Term Life

3. Whole Life

4. Endowment

The correct answer is: Term Life

The correct answer is Term Life insurance, as it is specifically designed to provide coverage for a predetermined period, or term, ranging from one year to several decades. This type of insurance offers a death benefit to the beneficiaries if the insured passes away during the term of the policy. Term Life is particularly valuable for individuals seeking affordable coverage for a specific duration, such as to cover the years until a mortgage is paid off, or while children are still financially dependent. It does not accumulate cash value, which differentiates it from permanent life insurance policies that last for the insured's entire lifetime and often have investment components. Universal Life, Whole Life, and Endowment policies are characterized by their permanent nature or additional savings features. Universal Life and Whole Life insurance provide lifelong coverage along with a cash value component, while Endowment policies typically mature after a specified term, providing a payout at maturity or upon the death of the insured. None of these options fit the definition of providing temporary coverage for a fixed term as Term Life does.