Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
A 20-year level term policy provides:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A level term policy maintains both a level death benefit and a level premium for the entire term, commonly 10, 20, or 30 years. The insurer prices the policy so that the level premium over the term covers the rising mortality cost of the later years. If the insured dies during the term, the full face amount is paid; if the insured survives, coverage ends unless the policy is renewed or converted. Level term is the most common term insurance structure sold today because it is simple and predictable.
Why the other options are wrong
- B) A decreasing term policy has a level premium and a death benefit that declines over time; level term keeps both the benefit and the premium constant. A decreasing term benefit is a different product structure from the level term contract described.
- C) An increasing benefit tied to inflation describes a COLA feature or inflation rider, not a level term policy. No inflation adjustment is built into a standard level term policy, and none is promised here.
- D) A level term policy pays the face amount for death at any time during the whole term, not only in the first year. Coverage applies throughout the full 20-year term for any death during it.
Memory hook
Level term = flat line for both premium and benefit, all the way to the term's end.