Question

Term insurance provides what is known as_______

a) Permanent coverage
b) Temporary coverage
c) Convertible coverage
d) Increasing coverage

Answer 1

The correct answer is option b. Term insurance provides temporary coverage for a specific term, usually ranging from 10 to 30 years.

Step-by-step explanation:

Term insurance provides temporary coverage.

Unlike cash-value (whole) life insurance which accumulates a cash value, term insurance is designed to provide coverage for a specific term, usually ranging from 10 to 30 years. It does not accumulate cash value and is typically less expensive than whole life insurance.

For example, if you purchase a 20-year term policy, you will have coverage for 20 years. If you pass away within that 20-year period, the insurance company will pay out the death benefit to your beneficiaries. Once the term is over, the coverage ends and you no longer have insurance.