West Virginia State Life Insurance Practice Exam

What type of life insurance policy typically has no cash value buildup?

1. Whole Life Policy

2. Term Life Policy

3. Variable Life Policy

4. Universal Life Policy

The correct answer is: Term Life Policy

A term life insurance policy is designed to provide coverage for a specified period, such as 10, 20, or 30 years. One of its defining characteristics is that it does not accumulate cash value over time. The primary focus of term life insurance is to provide a death benefit to the beneficiaries if the insured passes away during the term of the policy. Unlike whole life, variable life, or universal life policies, which include savings or investment components allowing cash value to grow, term life strictly offers protection without any financial accumulation. This makes term insurance generally more affordable compared to other policy types, as premiums are based solely on the cost of providing the death benefit for the specified term. In summary, the nature of term life insurance emphasizes protection without cash value, making it an essential option for individuals seeking straightforward life insurance without the complexities of savings or investment features.