Tennessee Insurance Practice Exam

Which combination plan is specifically designed to cover an unpaid mortgage balance in the event of premature death?

1. Variable Life

2. Joint Life

3. Universal Life

4. Term Insurance

The correct answer is: Joint Life

The combination plan that is specifically designed to cover an unpaid mortgage balance in the event of premature death is Joint Life. This type of insurance policy covers two individuals (typically spouses) under a single policy, paying out a death benefit upon the death of either insured. Joint Life policies can often be structured to ensure that the surviving spouse receives a payout that will cover the remaining mortgage balance, thus providing financial security and peace of mind during a difficult time. This feature makes Joint Life particularly appealing for couples with shared financial responsibilities, such as a mortgage. The death benefit from the policy would help prevent the surviving partner from facing the burden of the mortgage alone, ensuring that they can keep their home without the financial stress that comes from an unpaid mortgage. Other insurance types listed do not inherently have this specific aim; for instance, Variable Life and Universal Life policies are primarily focused on cash value accumulation and lifetime benefits rather than specifically addressing mortgage obligations upon death. Meanwhile, Term Insurance typically provides coverage for a specific period and does not offer a joint provision or the targeted benefit of covering unpaid mortgage balances in the event of both parties' untimely demise.