New York Insurance Exam Practice Question
Which of the following is a characteristic of term life insurance?
Correct Answer: B
Rationale: Term life insurance is designed to provide coverage for a specific period, typically ranging from 10 to 30 years. This characteristic distinguishes it from permanent life insurance, which offers lifelong coverage.
Option A, "Builds cash value," is incorrect because term life policies do not accumulate cash value; this feature is exclusive to permanent insurance types.
Option C, "Guaranteed premium increases," is misleading, as term life premiums typically remain level for the duration of the term, rather than increasing.
Option D, "Lifelong coverage," is inaccurate since term life insurance expires at the end of the specified term, unlike whole or universal life insurance, which lasts for the insured's lifetime.
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