South Carolina Life Insurance Practice Exam

A policy that pays a specified face amount if the insured dies during a 20-year period is classified as a 20-Year Level Term Policy. This type of insurance is designed to provide death benefit protection for a set term of 20 years, and during this period, the death benefit remains constant, or level, meaning it does not decrease over time. This term policy is typically more affordable than whole life insurance and does not accumulate cash value.

The focus of a level term policy is solely on providing a death benefit within the defined timeframe, making it an effective choice for individuals who need coverage for specific financial responsibilities, such as a mortgage or children's education, that may last for a set number of years. If the insured passes away within that 20-year term, the beneficiaries receive the specified face amount, ensuring financial security during that critical time.

In contrast, a whole life policy is permanent insurance that includes cash value accumulation and remains active for the insured's entire life, provided premiums are paid. A decreasing term policy features a death benefit that decreases over the life of the policy, making it unsuitable for situations where a level amount is needed. Lastly, a universal life policy is a flexible permanent life insurance option that combines a death benefit with a cash