It is a term life policy written for a given number of years with coverage remaining unchanged throughout the effective period. What is it?
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A. B. C. D.A
The correct answer is A. Straight term policy.
A straight term policy is a type of term life insurance that provides coverage for a specific period of time, typically ranging from one to 30 years. The coverage remains unchanged throughout the effective period, meaning the death benefit remains the same.
For example, if an individual purchases a 10-year straight term policy with a $500,000 death benefit, the policy will provide $500,000 in death benefit for the entire 10-year period. If the insured dies during the 10-year period, the beneficiary will receive the $500,000 death benefit. However, if the insured outlives the 10-year period, the policy will expire, and no death benefit will be paid.
A straight term policy is different from a decreasing term policy, which provides a decreasing death benefit over time. A decreasing term policy may be appropriate for individuals who have decreasing financial obligations over time, such as those who are paying off a mortgage or other debts.
Renewability is another feature of some term life insurance policies, which allows the insured to renew the policy at the end of the term without having to provide additional evidence of insurability. However, renewability is not a feature of a straight term policy, as the policy is designed to expire at the end of the specified term.