For a 10-year level term policy with a death benefit of $200,000, which of the following is true?

• A. The premium will increase each year
• B. The face amount and premium remain constant over the 10-year period.
• C. The policy accumulates cash value
• D. The policy cannot be renewed

Answer: (B)

Level term life insurance keeps both the death benefit and the premium fixed for the term. In a 10-year policy with a $200,000 death benefit, you pay the same premium every year for the full 10 years, and the death benefit stays at $200,000 if death occurs during those 10 years. There’s typically no cash value buildup in a pure term policy, so you don’t accumulate cash value. At the end of the term, coverage ends unless you renew or convert to a permanent policy. So the statement that the face amount and premium remain constant over the 10-year period is correct.