Krissa buys a 10-year level term life policy with a death benefit of $200,000. Which statement is true?

• A. The death benefits will increase over time.
• B. The face amount and premium will remain constant over the 10-year period.
• C. The policy builds cash value over time.
• D. The premium will double at the end of 10 years.

Answer: (B)

Level term insurance provides a fixed death benefit and a fixed premium for the term of the policy. Since this is a 10-year level term with a $200,000 death benefit, the amount paid upon death stays at $200,000 throughout the 10 years, and the premium remains the same each year during that period. These policies do not accumulate cash value, so there’s no cash value growth over time.

That’s why the statement about the face amount and premium remaining constant is the true one. The death benefit does not rise over time, the premium does not double at the end of the term, and there is no cash value buildup in a standard level term policy.