Arkansas Life and Health Insurance Practice Exam

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What is a common feature of term life insurance?

  1. Builds cash value

  2. Provides coverage for a specific period

  3. Premium remains constant until maturity

  4. Has investment component

The correct answer is: Builds cash value

Term life insurance is known for providing coverage for a specific period, typically ranging from 1 to 30 years. Unlike whole life insurance, term life insurance does not build cash value or have an investment component. The premium for term life insurance is based on factors such as the insured's age, health, and coverage amount, and it is usually lower compared to permanent life insurance policies. Therefore, the common feature of term life insurance is that it provides coverage for a specific period of time without accumulating cash value or having an investment component.

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