West Virginia State Life Insurance Practice Exam

Which type of policy provides coverage for a specific period?

1. Whole Life Policy

2. Endowment Policy

3. Term Life Policy

4. Joint Life Policy

The correct answer is: Term Life Policy

The type of policy that provides coverage for a specific period is the Term Life Policy. This form of insurance is designed to offer financial protection for a predetermined duration, typically ranging from one to thirty years. If the insured passes away during this term, the beneficiaries receive the death benefit. However, if the term expires and the insured is still alive, no benefit is paid out, and the coverage does not accumulate any cash value over time. This characteristic of being time-limited allows premium costs to be lower when compared to whole or endowment policies, which are structured to last for the lifetime of the insured or until a specific endowment maturity date, respectively. Unlike joint life policies, which cover two individuals under a single contract, the term life policy specifically focuses on a defined period of coverage for one individual. Thus, the clarity of a term lifespan makes it an ideal choice for those seeking temporary coverage, such as for a mortgage or to cover children’s education expenses.