DECA Hospitality Services Team Decision Making Practice Exam

What type of insurance ensures that beneficiaries receive an inheritance?

1. Term life insurance

2. Whole life insurance

3. Universal life insurance

4. Accidental death insurance

The correct answer is: Universal life insurance

The correct choice regarding the type of insurance that ensures beneficiaries receive an inheritance is universal life insurance. Universal life insurance is a flexible permanent life insurance policy that combines life coverage with a cash value component. This type of insurance allows the policyholder to adjust their premium payments and the death benefit, providing a strategic tool for wealth transfer to beneficiaries upon the policyholder’s death. Universal life insurance policies are designed to provide a death benefit, which can serve as an inheritance for loved ones. Because these policies accumulate cash value over time, they can also be used as a source of funds during the policyholder's life. The flexibility and long-term nature of universal life insurance make it an attractive option for individuals looking to ensure that their beneficiaries will receive a financial legacy. In contrast, term life insurance provides coverage for a specific period and does not accumulate cash value, meaning it only pays out if the insured dies within that term. Whole life insurance does provide a death benefit and cash value accumulation but is generally less flexible than universal life. Accidental death insurance only pays out in the event of death due to an accident, which does not guarantee an inheritance in the broader scope of life events. Therefore, universal life insurance stands out as the most suitable choice for ensuring an inheritance