Texas Life Agent Practice Exam

What is a common feature of most term life insurance policies?

1. They are non-convertible

2. They can convert to Whole Life without a physical exam

3. They offer cash accumulation

4. They have a high premium cost

The correct answer is: They can convert to Whole Life without a physical exam

Term life insurance policies typically have a feature that allows policyholders to convert their term policy into a whole life policy, often without undergoing a physical examination. This conversion privilege is particularly valuable as it provides policyholders with the flexibility to secure lifelong coverage, enabling them to maintain insurance even if they develop health issues during the term. Many insurers include this option to enhance the attractiveness of term policies, thus providing an easy transition to permanent insurance as the insured's needs evolve over time. The other options do not reflect common features of term life insurance policies. For instance, while some policies may offer a conversion option, not all term policies are convertible. Additionally, term life insurance does not accumulate cash value, which is a hallmark of whole life insurance, making any reference to cash accumulation incorrect. Lastly, term life insurance is generally characterized by lower premium costs compared to whole life insurance, especially when compared for the same coverage amount, contradicting any assertion that term policies have a high premium cost.