South Carolina Life Insurance Practice Exam

What type of life insurance policy offers pure death protection?

1. Whole Life

2. Term Insurance

3. Universal Life

4. Variable Life

The correct answer is: Term Insurance

Term insurance is designed specifically to provide pure death protection, which means it pays a death benefit to the beneficiary if the policyholder passes away within a specified term or period. Unlike other types of life insurance, term policies do not accumulate cash value over time; their primary purpose is to ensure financial coverage for loved ones in the event of an untimely death. This characteristic makes term insurance a straightforward option, focusing solely on providing a death benefit without any investment component. In contrast, whole life, universal life, and variable life policies incorporate savings elements or cash values that accumulate over time. Whole life provides both death coverage and a savings component that grows, while universal life offers flexibility with premiums and death benefits combined with a cash value element. Variable life allows for investment options within the policy, with values that can fluctuate based on performance. All these features differentiate these types of policies from term insurance, which solely emphasizes death protection without any additional investment or savings features.