Which of the following best describes renewable term insurance as it relates to investments in securities?

• A. A type of life insurance that can be renewed at the end of each term without evidence of insurability.
• B. An equity investment that provides ownership in a corporation.
• C. A security that pays fixed interest and matures at a specific date.
• D. A permanent life insurance policy that accumulates cash value over time.

Answer: (A)

Verified step by step guidance

1. Step 1: Begin by understanding the concept of renewable term insurance. Renewable term insurance is a type of life insurance policy that allows the policyholder to renew the coverage at the end of the term without providing evidence of insurability, such as medical exams.
2. Step 2: Analyze the options provided in the question. The goal is to identify which description aligns with renewable term insurance. Carefully read each option and compare it to the definition of renewable term insurance.
3. Step 3: Eliminate options that clearly do not match the characteristics of renewable term insurance. For example, options related to equity investments, fixed-interest securities, or permanent life insurance policies with cash value accumulation are unrelated to renewable term insurance.
4. Step 4: Focus on the option that describes renewable term insurance accurately. This option should highlight the ability to renew the policy without evidence of insurability, which is the defining feature of renewable term insurance.
5. Step 5: Confirm your understanding by reviewing the definition of renewable term insurance and ensuring that the selected option matches this definition. This step reinforces the accuracy of your choice.