An insured age 40 buys a 20-year level term policy. At age 60 the policy will

Rationale

At age 60, the policy will terminate unless converted or renewed.

A 20-year level term policy provides coverage for a specified term, in this case, 20 years. If the insured reaches age 60 and the policy has not been converted or renewed, it will terminate, leaving the insured without coverage.

A (Automatically renew) YOUR ANSWER

Term life insurance policies typically do not have automatic renewal after the initial term unless specifically stated. In most cases, a term policy will end at the conclusion of its designated period, which in this scenario is 20 years, unless the policyholder takes action to renew it.

B (Convert to whole life) YOUR ANSWER

While some term policies include a conversion option, it is not automatic. The insured must actively choose to convert the policy to whole life before the term ends. If no action is taken by the insured, the policy will terminate at the end of the term.

C (Terminate unless converted or renewed) CORRECT

This is the accurate outcome for a 20-year level term policy. If the insured does not convert or renew the policy by age 60, the coverage will cease. This emphasizes the importance of understanding the policy terms and options available before reaching the end of the term.

D (Become paid-up term) YOUR ANSWER

A term policy does not convert to a paid-up status, as this term refers to permanent policies where premiums are fully paid and no further payments are required. A term policy, by its nature, expires after the term ends unless actions are taken to convert or renew.

Conclusion

In summary, a 20-year level term policy will terminate at the end of the term if the insured does not exercise the options to convert or renew. It is crucial for policyholders to understand their policy provisions and timelines to ensure continued coverage as they approach the end of their term.

An insured age 40 buys a 20-year level term policy. At age 60 the policy will

At age 60, the policy will terminate unless converted or renewed.

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