Utah Life Insurance Practice Test

Question: 1 / 400

What does "level premium" mean in life insurance?

A premium payment that varies based on age

A premium payment that remains constant over time

A "level premium" in life insurance refers to a payment structure in which the premium amount remains constant throughout the life of the policy. This means that the policyholder pays the same amount each month or year, regardless of changes in their age or health status. This structure is beneficial for budgeting purposes, as it allows individuals to predict their expenses related to the insurance policy over time.

Level premiums are particularly common in whole life and some term insurance policies, where the intent is to maintain affordability and predictable financial planning. Premiums may initially be higher than those in a policy with escalating premiums, but they offer stability and ease of management for the policyholder. Over the life of the policy, especially for younger insured individuals, a level premium can also lead to significant cost savings compared to options that increase with age or health changes.

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A one-time premium payment for the entire policy

A premium that decreases as the insured ages

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