Tennessee Insurance Practice Exam

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Prepare for the Tennessee Insurance Exam with engaging quizzes featuring detailed flashcards, multiple-choice questions, hints, and explanations, ensuring readiness for test day.

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Which type of life insurance provides coverage for a specified period and pays the lowest premiums?

Term Life
Whole Life
Universal Life
Variable Life

The correct answer is: Term Life

Term life insurance is specifically designed to provide coverage for a specified period, such as 10, 20, or 30 years. One of the main features that makes term life particularly appealing is that it offers the lowest premiums compared to other types of life insurance. This is due to the fact that term life insurance provides coverage only for a predetermined term and does not build cash value over time. If the insured passes away during the term, the death benefit is paid out to the beneficiaries. However, if the term expires and the insured is still living, no benefit is received, nor is there any cash value accumulated. In contrast, whole life, universal life, and variable life insurance are designed to last for the entire life of the insured and typically come with higher premiums. These policies have a savings component and can accumulate cash value, adding to their cost. Thus, the appeal of term life insurance lies in its affordability and straightforward structure, making it suitable for those who want coverage without the added expenses associated with cash value accumulation.