Texas Life Agent Practice Exam

Which life insurance type generally has the lowest premium?

1. Whole Life

2. Term Life

3. Adjustable Life

4. Universal Life

The correct answer is: Term Life

Term life insurance generally has the lowest premium among the various types of life insurance options available. This is primarily because term life provides coverage for a specific period, or "term," such as 10, 20, or 30 years, without any cash value accumulation. As a result, premiums are significantly lower compared to permanent life insurance products that build cash value over time, such as whole life, adjustable life, and universal life policies. The low premium costs associated with term life make it an attractive option for individuals seeking affordable coverage, especially for those who may only need life insurance to cover temporary financial obligations, such as raising children or paying off a mortgage. With term life, you are only paying for the death benefit during the set coverage period, which is a key factor that keeps premiums low. This feature enables more individuals and families to secure necessary protection at a lower cost, allowing for easier affordability in comparison to permanent options.