PSI Life Exam Practice Test 2025 - Free Life Insurance Exam Questions and Study Guide

The correct choice, which is tax-deferred growth, refers to a financial product or investment that allows the money to grow without being taxed until a later date, often at retirement or when funds are withdrawn. This characteristic enables individuals to accumulate a larger retirement fund over time, providing a stream of retirement income when they need it most.

While tax-deferred growth is a significant feature of certain retirement accounts, such as annuities or retirement plans, which are specifically designed to generate income for retirement, products like whole life insurance also offer elements of cash value accumulation that can be accessed later. This stream of retirement income derived from tax-deferred growth can help build a more robust financial foundation during retirement years.

In contrast, term life insurance is primarily designed to provide a death benefit to beneficiaries upon the death of the insured and does not accumulate cash value or provide a retirement income stream. Universal life insurance can include elements of cash value, but it is more focused on providing flexible premiums and death benefits rather than guaranteed retirement income. Whole life insurance, like universal life, does build cash value over time, but it may not inherently serve as a dedicated stream of retirement income in the same way that a product specifically designed for that purpose would. Therefore, tax-deferred