2. Write and explain the classification of term life insurance(8 pt)

Term life insurance can be classified in several ways:<br /><br />**1. By Term Length:**<br /><br />* **Level Term:** This is the most common type. The death benefit remains level (the same) throughout the policy's term. Premiums are also typically fixed for the duration of the term. *Explanation:* This provides predictable coverage and cost for a specific period, such as 10, 15, 20, 25, or 30 years.<br /><br />* **Decreasing Term:** The death benefit gradually decreases over the policy term, while premiums remain level. *Explanation:* This type is often used to cover debts that decrease over time, like a mortgage. As the mortgage balance declines, so does the insurance coverage.<br /><br />* **Increasing Term:** The death benefit increases over the policy term, often tied to an inflation index. Premiums also typically increase. *Explanation:* This helps maintain the purchasing power of the death benefit over time, accounting for inflation.<br /><br />* **Renewable Term:** Allows the policyholder to renew the policy at the end of the term without undergoing a new medical exam. *Explanation:* This offers continued coverage, but premiums will typically increase at each renewal based on the insured's attained age.<br /><br />* **Convertible Term:** Gives the policyholder the option to convert the term policy to a permanent life insurance policy (like whole life or universal life) within a specified timeframe and without a medical exam. *Explanation:* This provides flexibility to secure lifelong coverage later if needs or circumstances change.<br /><br /><br />**2. By Premium Payment Frequency:**<br /><br />* **Level Premium:** Premiums remain the same throughout the policy term. *Explanation:* This offers predictable budgeting.<br /><br />* **Annually Renewable Term (ART):** The policy is renewed annually, and premiums increase each year based on the insured's attained age. *Explanation:* This is the purest form of term insurance, offering coverage for one year at a time.<br /><br /><br />**3. By Special Features:**<br /><br />* **Return of Premium (ROP) Term:** If the insured outlives the policy term, all premiums paid are returned. *Explanation:* This offers a "money-back" feature, but premiums are typically higher than standard term insurance.<br /><br /><br />It's important to note that some policies may combine features, such as a level premium, renewable, and convertible term policy. The specific classifications and options available can vary by insurance provider.<br />