California Insurance License Exam Practice Test Practice Question
Which type of insurance guarantees the right to renew the policy each year, regardless of health, but at an increased premium?
Correct Answer: B
Rationale: Renewable term insurance allows policyholders to renew their coverage annually without needing to provide proof of health, although the premium may increase with each renewal. This feature is crucial for individuals who may develop health issues over time, ensuring continued coverage.
Option A, level term, offers a fixed premium and death benefit but does not guarantee renewal. Option C, decreasing term, features a declining death benefit over time, which does not align with the renewal concept. Option D, convertible term, allows conversion to permanent insurance but does not guarantee annual renewal. Thus, renewable term best fits the description provided.
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