Future Business Leaders of America (FBLA) Personal Finance Practice Test

What type of insurance provides coverage for a lifetime?

1. Term life insurance

2. Whole life insurance

3. Accidental death insurance

4. Disability insurance

The correct answer is: Whole life insurance

Whole life insurance provides coverage for a lifetime, making it a permanent type of life insurance. It not only offers a death benefit to the beneficiaries in the event of the policyholder's passing but also includes a savings component that builds cash value over time. This cash value can be borrowed against or withdrawn, providing the policyholder with financial flexibility during their lifetime. The lifetime coverage aspect means that as long as the premiums are paid, the policy remains in force regardless of the insured’s age or health changes. In contrast, term life insurance only provides coverage for a specified period, typically ranging from 10 to 30 years, and does not accumulate cash value. Accidental death insurance specifically covers death resulting from accidents and does not provide ongoing coverage. Disability insurance is designed to replace income in the event that a policyholder is unable to work due to a disability, rather than providing life insurance coverage. Whole life insurance uniquely ensures lifelong coverage along with the benefit of cash value growth.