Texas Life Agent Practice Exam

A client wishes to ensure their family can maintain their current standard of living in the event of their death. Which type of insurance would be most appropriate?

1. Term Life Insurance

2. Whole Life Insurance

3. Universal Life Insurance

4. Variable Life Insurance

The correct answer is: Whole Life Insurance

To help a client ensure their family can maintain their current standard of living in the event of their death, whole life insurance is the most appropriate choice. Whole life insurance provides a death benefit that is guaranteed to be paid upon the insured's death, which helps secure the financial future of the policyholder's family. This type of insurance also accumulates cash value over time, which can be borrowed against if needed. The premiums are generally fixed for the life of the policy, providing consistency and predictability in budgeting for insurance costs. Because it combines coverage with a savings component, whole life insurance can also offer a long-term financial benefit that a family might rely on in addition to the death benefit. In contrast, other types of life insurance, such as term life insurance, provide coverage for a specific period without the cash value component, meaning that once the term expires, the coverage ends. Universal life insurance offers flexible premiums and death benefits but can become complex and may require monitoring and adjustments. Variable life insurance adds investment components, which can lead to variable returns and risks, and may not guarantee a fixed standard of living for the beneficiaries. Therefore, whole life insurance is the most fitting for the client’s goal of ensuring financial security for their family.