LLQP Life Insurance · Component 2.1 · 30% of the exam
Increasing term insurance is designed to:
- AProvide a cash value that grows in step with the death benefit, so the client accumulates savings as well as protection over the term
- BDecrease the death benefit each year as the client's debts are paid down and the family's need shrinks
- Raise the death benefit over time to keep pace with inflation, usually with rising premiums
- DCover only accidental death, with the benefit increasing each year the insured avoids a claim
Correct answer: C) Raise the death benefit over time to keep pace with inflation, usually with rising premiums
Increasing term (or an indexing feature) raises coverage on a schedule. It suits needs that grow — inflation-exposed income replacement — but the premiums rise with the benefit.
Why the other options are wrong
- ATerm has no cash value.
- BA decreasing benefit is decreasing term.
- DIt covers death from any cause.
Exam tip
Level, increasing, decreasing term: match the shape of the benefit to the shape of the need.
Common mistake
Confusing increasing term with a cost-of-living rider on a permanent policy.
What this tests
CISRO competency component 2.1 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Life Insurance module. Written against the published curriculum.
More from component 2
- A client has a need lasting about twenty years and compares a ten-year and a twenty-year term policy. The main point to explain is that:
- A client exercises the conversion privilege on his term policy. The permanent premium will be based on:
- A client notices that a small policy costs proportionately more per unit of coverage than a larger one. The explanation is that:
- A client wants to pay monthly rather than annually. The agent should explain that monthly payment:
- A client asks why dividends from her participating policy are not taxed like interest from a bank. The reason is that a dividend is:
- A universal life policyholder is choosing among the investment options inside her policy. She should understand that:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.