What are the three types of term policy structures?

The correct answer identifies the three primary structures of term insurance policies: level term, decreasing term, and increasing term.

Level term insurance provides a death benefit that remains consistent throughout the life of the policy. This structure is appealing because it allows the policyholder to know exactly how much will be paid out if the insured passes away during the term.

Decreasing term insurance features a death benefit that declines over time, typically aligning with specific financial obligations, such as a mortgage. This type of term policy can be advantageous for individuals who want to cover debts that decrease over time, ensuring that the payout matches the decreasing liability.

Increasing term insurance, on the other hand, has a death benefit that rises at predetermined intervals or by a specified amount. This structure can be beneficial for policyholders who anticipate increased financial needs in the future, such as inflation or changes in family circumstances.

In contrast, the other options present alternative structures, such as whole life or convertible policies, but do not accurately define the standard categories of term life insurance. Understanding these three types is essential for selecting the appropriate term insurance based on individual needs and financial planning.