Florida Life and Health Insurance License Practice Test 2025 - Free Insurance Practice Questions and Study Guide

Question: 1 / 400

What type of life insurance are credit policies issued as?

Whole life

Universal life

Adjustable life

Term

Credit policies are issued as term life insurance. Unlike whole life, universal life, or adjustable life insurance, term life insurance does not have a cash value component and is meant to provide coverage for a set number of years. Credit policies are specifically designed to cover a borrower's outstanding debt in the event of their death, making term life insurance the most suitable option. Whole life, universal life, and adjustable life insurance all have a savings or investment component, making them less appropriate for credit policies. If the borrower were to pass away, the payout from these types of policies may not cover the outstanding debt amount. Therefore, term life insurance is the best type of life insurance for credit policies.

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