PSI Life Exam Practice Test 2026 - Free Life Insurance Exam Questions and Study Guide

Question: 1 / 400

What does it indicate if a life insurance policy has a level premium?

The premium amount varies based on the insured's age

The premium amount decreases over time

The premium amount remains constant throughout the life of the policy

A life insurance policy with a level premium means that the premium amount stays the same over the entire duration of the policy. This feature provides predictability and stability for policyholders, as they can budget their expenses without worrying about fluctuating costs. Level premiums are commonly associated with whole life insurance and some term life insurance products, allowing policyholders to maintain the same payment structure throughout the policy's life.

In contrast, other options suggest scenarios where premiums would vary, decrease, or only be fixed for a limited time. These variations can create uncertainty and might affect a policyholder's long-term financial planning, which is not the case with a level premium policy. This consistency is a key advantage for individuals seeking stability in their life insurance costs.

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The premium amount is only fixed for the first five years

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