Life Insurance: Whole vs. Term

What is the primary purpose of life insurance?

• To provide a savings account for retirement

• To guarantee financial support for your beneficiaries after your death

• To avoid paying taxes on income

• To increase your net worth

What is the payout from a life insurance policy called?

• Premium

• Cash value

• Death benefit

• Dividend

What happens to a term life insurance policy if the insured person outlives the term?

• The beneficiaries receive a smaller payout

• The policy builds cash value

• The policy expires, and there is no payout

• The premiums are refunded

Why is term life insurance generally more affordable than whole life insurance?

• It provides lifelong coverage

• It does not build cash value

• It is only available to young people

• It includes additional investment options

Which of the following is a key feature of whole life insurance?

• It provides coverage for a specific term

• It builds cash value over time

• It is less expensive than term life insurance

• It does not pay a death benefit

If a parent wants life insurance to ensure financial security for their children until they are grown, which type of policy is more practical?

• Term life insurance

• Whole life insurance

• No life insurance

Which of the following best describes the cash value in a whole life insurance policy?

• Money paid to beneficiaries upon death

• A savings-like feature you can borrow against

• A refund of premiums paid

• The cost of maintaining the policy

What is one disadvantage of whole life insurance compared to term life insurance?

• It does not pay a death benefit

• It only lasts for a specific term

• It is more expensive

• It cannot be borrowed against

What analogy does the reading use to compare term and whole life insurance?

• Renting (term) vs. buying (whole)

• Short-term loans (term) vs. long-term loans (whole)

• Leasing a car (term) vs. owning a car (whole)

• Temporary jobs (term) vs. permanent jobs (whole)

Why might someone choose whole life insurance over term life insurance?

• They want a lower monthly premium

• They only need coverage for a specific time

• They want lifelong coverage and cash value benefits

• They do not have dependents