Life License Qualification Program (LLQP) Practice Exam

Which type of life insurance provides the highest coverage for a limited time?

1. Term life

2. Graded Premium Whole Life

3. Whole life

4. Endowment policy

The correct answer is: Term life

Term life insurance is designed to provide a high amount of coverage for a specific period, typically ranging from 10 to 30 years. This type of policy is particularly attractive for those who need significant financial protection for a limited time, such as when raising children or paying off a mortgage. Since term life insurance does not accumulate cash value and is strictly focused on providing a death benefit, it allows for higher coverage amounts at lower premiums compared to whole life or endowment policies. While graded premium whole life and whole life insurance policies offer lifelong coverage and the benefit of cash value accumulation, they generally come with higher premiums and lower coverage amounts for the same cost when compared to term life insurance. Endowment policies also offer a savings component and provide a payout either upon death or after a certain period, but they typically do not have the same level of high coverage for a limited timeframe as term life insurance does. Thus, term life effectively meets the criteria of providing the highest coverage for a limited duration, making it the optimal choice in this context.