Question

Penelope buys a life insurance policy on her own life, under which she pays the annual premiums. The insurance is issued for a specific period, but is renewable for similar periods. Penelope is covered only as long as she makes the payments. There is no cash value portion to the policy. Penelope probably owns _______.

Answer 1

Penelope owns term life insurance, which provides coverage for a set period as long as she pays the annual premiums without accumulating any cash value.

Step-by-step explanation:

Penelope probably owns term life insurance. This type of insurance is characteristically for a set period and offers a death benefit without any cash value accumulation. Policyholders pay annual premiums to maintain the coverage, which is precisely what Penelope does. If she stops paying the premiums, the insurance coverage ends. Term life insurance can be renewed for additional periods at the end of each term, which aligns with the description provided by the student.