Which term life policy features a level premium and a death benefit that increases each year over the duration of the policy term; used by the insurer to fund riders (return of premiums) and used for cost of living?

Which term life policy features a level premium and a death benefit that increases each year over the duration of the policy term; used by the insurer to fund riders (return of premiums) and used for cost of living?

• A. Term insurance
• B. Decreasing term insurance
• C. Increasing term insurance
• D. Level term insurance

Answer: (C)

This question centers on how term life policies can be structured so the premium stays level while the death benefit grows over time. An increasing term policy keeps a level premium for the term, but the death benefit increases each year, so the coverage grows as the years pass. This setup lets the policy address inflation or future needs and often supports riders like return-of-premium or other cost-of-living features that require a larger benefit later on. Decreasing term would have a declining death benefit, and level term keeps both premium and benefit the same, so they wouldn’t match the described arrangement. So the described policy is increasing term insurance.

This question centers on how term life policies can be structured so the premium stays level while the death benefit grows over time. An increasing term policy keeps a level premium for the term, but the death benefit increases each year, so the coverage grows as the years pass. This setup lets the policy address inflation or future needs and often supports riders like return-of-premium or other cost-of-living features that require a larger benefit later on. Decreasing term would have a declining death benefit, and level term keeps both premium and benefit the same, so they wouldn’t match the described arrangement. So the described policy is increasing term insurance.