FRM Part I · FRM Exam Part I · Insurance Companies and Pension Plans
A life insurer sells a policy that pays a death benefit only if the insured dies within a fixed 20-year period and has no cash value or savings component. Which type of life insurance is this?
This is term life insurance. It pays a death benefit only if the insured dies within the fixed 20-year term and has no cash value or savings component, unlike whole life, endowment, or variable universal life policies, which include a savings or investment element.
- ATerm life insuranceCorrect
- BWhole life insurance
- CEndowment life insurance
- DVariable universal life insurance
Explanation
Term life insurance provides protection only for a stated period and pays only if death occurs in that period, with no savings element. Whole life and endowment policies build cash value, and variable universal life links the cash value to investments.
Did you get it right without looking?
One question tells you little. A timed set on Insurance Companies and Pension Plans shows your real accuracy, how long you take and where you lose marks.
More Insurance Companies and Pension Plans questions
- A life table gives survivors l60 = 80,000, l61 = 79,200 and l62 = 78,000. What is the probability that a person aged 60 survives to 61 and t…
- A life table shows 95,000 survivors at age 50 and 90,250 survivors at age 60 out of an original cohort. An insurer sells a 10-year pure endo…
- An insurer offers a car policy with no deductible and finds that insured drivers become less careful after buying coverage, raising the aver…
- An insurer writes a 1-year term policy with a 500,000 death benefit. The probability of death within the year is 0.4%, and benefits are paid…
- A mortality table shows 90,000 persons alive at age 40 and 89,100 alive at age 41. What is the one-year probability that a person aged 40 di…
- Which feature best explains why life insurers generally face greater interest-rate and longevity-related balance-sheet risk than property-ca…