Which term describes life insurance kept for the insured's entire life and pays a death benefit when they die?

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Study for the General Financial Literacy State Test. Prepare with flashcards and multiple-choice questions, each with hints and explanations. Enhance your financial expertise for success!

Multiple Choice

Which term describes life insurance kept for the insured's entire life and pays a death benefit when they die?

Explanation:
Whole life insurance provides lifelong coverage that lasts for the insured’s entire life and pays a death benefit when they die. It stays in force for life, usually with level premiums, and it also builds cash value over time that can be borrowed against. This is different from term life insurance, which only covers a defined period and may end without paying if the insured outlives the term, and from generic “insurance policy” or from bonds, which are not life insurance products and don’t guarantee a death benefit.

Whole life insurance provides lifelong coverage that lasts for the insured’s entire life and pays a death benefit when they die. It stays in force for life, usually with level premiums, and it also builds cash value over time that can be borrowed against. This is different from term life insurance, which only covers a defined period and may end without paying if the insured outlives the term, and from generic “insurance policy” or from bonds, which are not life insurance products and don’t guarantee a death benefit.

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