Types of Policies
An individual purchases a life insurance policy that provides coverage for exactly one year. At the end of the year, the policyowner can renew the coverage without proving insurability, but the premium will increase based on their attained age. What type of policy is this?
Answer and explanation
Answer: B. Annual renewable term renews for successive one-year periods and normally charges a higher premium at each renewal as attained age increases.Source: New York State Department of Financial Services — Consumer Life Insurance FAQ — What are the main types of term life insurance? > Annual renewable term
More types of policies questions
- An indexed universal life policy's referenced index has a negative result for the crediting period. Which contract feature should the owner examine to determine the lowest credited rate?
- An insured buys convertible term at age 30 and converts it to permanent insurance at age 40. Which age generally determines the new premium?
- An insured develops a health condition halfway through a 20-year level term policy. What happens to the fixed death benefit and premium specified for that term?
- An insured outlives a return-of-premium term policy, and no death benefit was paid. What feature may then apply according to the contract?
- An insured’s health deteriorates during a renewable term policy. At the end of the term, which feature is most valuable?
- An insured's health worsens before a renewable term policy expires. The renewal right is still available. Which outcome best reflects that feature?
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