Future Business Leaders of America (FBLA) Business Law Practice Exam

Which type of life insurance requires premium payments until death or the face value is reached?

1. Term life insurance

2. Universal life insurance

3. Straight life insurance

4. Variable life insurance

The correct answer is: Straight life insurance

Straight life insurance, also known as whole life insurance, requires premium payments to be made throughout the life of the insured or until the policy's face value is reached. This means that the coverage remains in effect for the insured's entire life, as long as the premiums are paid. The policy accumulates cash value over time, which can be accessed or borrowed against. Unlike term life insurance, which provides coverage for a specific period and pays out only if the insured passes away during that term, straight life insurance offers lifelong protection. Universal and variable life insurance, while also providing lifelong coverage, have flexible premium payments and can have varying death benefits and cash value growth based on investment performance or selected features. Straight life insurance's straightforward premium structure and lifetime coverage are why this option is the most accurate answer to the question.