Oklahoma Life Producer Practice Exam

What type of term life insurance has a coverage amount that starts low and increases over time?

1. Fixed term

2. Level term

3. Growing term

4. Increasing term

The correct answer is: Increasing term

Increasing term life insurance is designed specifically to provide a death benefit that starts at a lower amount and gradually increases over the term of the policy. This type of policy is beneficial for individuals who anticipate that their insurance needs will rise over time, such as as their debts or financial obligations grow. The structure of increasing term insurance allows policyholders to secure initial coverage at a lower premium cost, with the understanding that the coverage will ramp up to meet future needs. This feature makes it attractive for those who predict increased financial responsibilities, like marriage, home purchases, or starting a family, which typically occur as they age. In contrast, fixed term policies offer a constant death benefit and level term policies maintain the same coverage throughout the contract duration, lacking the increasing benefit feature. Growing term could suggest a higher death benefit, but it's not an officially recognized term in the insurance industry, making increasing term the clearly defined correct answer in this context.