LLQP Life Insurance · Component 2.1 · 30% of the exam
Level term insurance is characterized by:
- APremiums that stop after ten years, after which the policy continues paid-up for the rest of the term
- A death benefit and premium that stay the same for the term
- CA death benefit that rises each year to keep pace with inflation and the family's growing needs
- DA cash value that grows each year and can be borrowed against once the policy has been in force for a decade
Correct answer: B) A death benefit and premium that stay the same for the term
Level term keeps both the face amount and the premium constant for the term (10, 20, 30 years or to a set age). At renewal, the premium steps up to the new age band. It has no cash value.
Why the other options are wrong
- APremiums continue for the whole term.
- CA rising death benefit describes increasing term.
- DTerm insurance has no cash value.
Exam tip
Level term: level face amount, level premium, no cash value, higher premium at renewal.
Common mistake
Assuming 'level' means the premium stays level forever, including after renewal.
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.