Question

Your friends, Sal (age 27) and Ellen (age 25), just had their first child. They realize that the surviving family would have financial difficulty, if either of them was to die prematurely. Which of the following forms of life insurance would best achieve their current objective of providing the highest death benefit possible given the lowest premium payment?

a. Group of answer choices

b. Universal life

c. Modified whole life

d. Term life

e. Variable life

Answer 1

The answer is option "d" term life.

Explanation:

Term life insurance lasts for a set number of years before it expires. If you die before the term is up, a set amount of money, known as the death benefit, is paid to your designated beneficiary. Term life is considered the simplest, most accessible insurance policy in which premiums are low and death benefits are high.

When you make your payments (known as your premium), you’re simply paying for the death benefit that goes to your beneficiaries in the event of your death. The death benefit can be paid out as a lump sum, a monthly payment, or an annuity. Most people elect to receive their death benefit as a lump sum.