PSI Ohio Insurance Practice Exam

In a level term life policy, what aspect of the policy remains unchanged throughout the term?

1. Premium payments

2. Death benefit

3. Coverage period

4. Investment options

The correct answer is: Death benefit

In a level term life policy, the aspect that remains unchanged throughout the term is the death benefit. This means that regardless of when the policyholder passes away during the specified term, the designated beneficiaries will receive the same amount of coverage stated in the policy. This fixed amount provides peace of mind to policyholders and their beneficiaries, as it ensures that their financial obligations will be met regardless of fluctuations in their circumstances. Other elements of a level term policy can vary. For example, premium payments may change in other types of policies but are typically fixed in level term policies, making them stable and predictable. The coverage period is predefined; however, in the context of different kinds of insurance, it could vary among different policy types. Investment options are generally not applicable in a pure term life insurance policy, as these policies do not accumulate cash value like whole or universal life insurance policies. Thus, the stability of the death benefit is a key feature that defines the level term life policy.