Pennsylvania Life and Health Insurance Exam Practice Question
Which type of life insurance policy combines annual renewable term insurance with a cash value account?
Correct Answer: B
Rationale: Universal life insurance uniquely combines the flexibility of annual renewable term insurance with a cash value component that grows over time. This allows policyholders to adjust premiums and death benefits as needed while accumulating savings.
Whole life insurance offers a guaranteed death benefit and fixed premiums but lacks the flexibility of universal life. Endowment policies pay out a lump sum after a specific period or upon death, but they do not operate as renewable term insurance. Variable life insurance allows for investment in various accounts, but it does not specifically combine renewable term features with a cash value account in the same way universal life does.
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