Utah Life Producer Practice Exam

The key difference between term life insurance and whole life insurance is that term life insurance provides coverage for a specific period of time. This means it is designed to protect the policyholder for a predetermined term, such as 10, 20, or 30 years. If the insured passes away during that term, the designated beneficiaries receive a death benefit. However, if the term expires and the insured is still alive, the coverage ends, and no benefit is paid out.

In contrast, whole life insurance provides lifelong coverage as long as premiums are paid. It builds cash value over time and often includes the ability to borrow against the policy or utilize the cash value in certain ways.

The other options do not accurately represent the fundamental distinctions between these types of insurance. Whole life insurance is typically more expensive than term life insurance because it offers lifelong coverage and cash value accumulation. Term life insurance does not pay dividends; this feature is usually associated with certain whole life policies. Lastly, whole life insurance policies generally do not have lower coverage limits compared to term policies; instead, they can often provide higher coverage options due to the lifetime protection and cash value feature.