Which term insurance features a level premium with an increasing death benefit over time to reflect inflation or living costs?

Which term insurance features a level premium with an increasing death benefit over time to reflect inflation or living costs?

• A. Increasing term insurance
• B. Term insurance
• C. Decreasing term insurance
• D. Permanent life insurance

Answer: (A)

The idea being tested is that some term life policies are designed so the death benefit grows over time while the premium stays level. This type, called increasing term life insurance, keeps your annual payment fixed but raises the payout amount over the term to reflect inflation or higher living costs later on. In practice, this means your protection increases as expenses rise, without you facing higher premiums at each renewal. This differs from policies that keep the death benefit the same the entire term or that decrease the benefit over time, and from permanent life insurance, which typically involves cash value and doesn't automatically increase the death benefit while keeping premiums level.

The idea being tested is that some term life policies are designed so the death benefit grows over time while the premium stays level. This type, called increasing term life insurance, keeps your annual payment fixed but raises the payout amount over the term to reflect inflation or higher living costs later on. In practice, this means your protection increases as expenses rise, without you facing higher premiums at each renewal. This differs from policies that keep the death benefit the same the entire term or that decrease the benefit over time, and from permanent life insurance, which typically involves cash value and doesn't automatically increase the death benefit while keeping premiums level.