Trend Micro Practice Test & Exam Prep

Which type of term insurance is commonly used to cover a debt whose outstanding balance declines over time?

Increasing term Decreasing term Return-of-premium whole life Single-premium life

Correct Answer:

Decreasing term

Explanation:

Decreasing term insurance reduces the death benefit over the term and is often used to match a declining obligation such as certain loan balances. The premium may remain level even while the benefit decreases.

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