Oklahoma Life Producer Practice Exam

What type of insurance policy focuses on providing coverage for a family for a fixed term?

1. Limited benefits policy

2. Family maintenance policy

3. Term life policy

4. Adjustable life policy

The correct answer is: Term life policy

A term life policy is designed specifically to provide life insurance coverage for a predetermined period, or "term." This type of policy ensures that if the insured individual passes away during that specified term, the designated beneficiaries will receive the death benefit. The primary focus of a term life policy is to offer financial protection for families during critical years, such as when children are dependents or when there are significant financial obligations, such as a mortgage. Term life policies are particularly appealing because they are generally more affordable compared to whole life or universal life insurance, making them a practical choice for families looking for coverage without a long-term financial commitment. After the term expires, policyholders may have the option to renew or convert their policy to a permanent form of life insurance, ensuring ongoing coverage if needed. This focus on providing insurance for a fixed term distinguishes term life policies from other types of life insurance, such as whole life or universal life, which provide coverage for the entire lifetime of the insured and may involve cash value components.