Tennessee Insurance Practice Exam

What type of life insurance policy would be best for an individual looking for level premiums, permanent protection, and full pay-up at retirement?

1. Universal Life Policy

2. Whole Life Policy

3. 30 Pay Life

4. Term Life Policy

The correct answer is: 30 Pay Life

The best choice for an individual seeking level premiums, permanent protection, and a fully paid-up policy at retirement is the 30 Pay Life policy. This type of whole life insurance allows the policyholder to pay premiums for a specific period—30 years in this case—after which the policy becomes fully paid up. With a 30 Pay Life policy, the premium payments are consistent throughout the payment period, offering the stability of level premiums. Once the payments are completed, the insured retains lifetime protection, ensuring that the benefit is available to beneficiaries regardless of the insured's age at death after the policy has been paid in full. This structure aligns perfectly with the desire for permanent protection and the satisfaction of having the policy paid for by retirement age. In contrast, a Universal Life policy provides flexibility in premium payments and death benefits, which might not guarantee level premiums or a fully paid-up status at retirement unless carefully structured. A Whole Life policy also offers permanent protection, but typically entails higher premiums and may not specifically provide for a fully paid-up status within 30 years. Term Life insurance, on the other hand, is designed solely for a specific period and does not provide permanent coverage or accumulate cash value, making it unsuitable for the requirements outlined.