PSI Ohio Insurance Practice Exam

Which insurance policy offers only temporary coverage?

1. Whole Life Insurance

2. Term Life Insurance

3. Variable Life Insurance

4. Endowment Policy

The correct answer is: Term Life Insurance

Term Life Insurance is designed to provide coverage for a specific period, such as 10, 20, or 30 years. This is what makes it a temporary form of insurance. If the insured passes away during this covered term, the beneficiaries receive the death benefit. However, if the insured survives the term, the coverage expires without any cash value or benefits being paid out. In contrast, Whole Life Insurance and Variable Life Insurance are permanent policies that provide coverage for the insured's entire life, as long as premiums are paid. An Endowment Policy also offers lifelong coverage but typically pays out a benefit either upon death or upon reaching a specified age, often providing a maturity benefit that distinguishes it from temporary policies like term insurance. Thus, Term Life Insurance uniquely fulfills the need for short-term coverage without long-term investment components or benefits.