Insurance Broker Certification Practice Exam

Life insurance insures against financial loss caused by which event?

1. Long-term disability

2. Premature death

3. Medical expenses

4. Property damage

The correct answer is: Premature death

Life insurance is designed specifically to address the financial implications of an individual's premature death. The primary purpose of life insurance is to provide a financial safety net for the beneficiaries when the insured person passes away unexpectedly. This financial benefit helps cover living expenses, pay off debts, and ensure that dependents can maintain their standard of living despite the loss of income that would have come from the insured person. The other options represent different types of financial risks that are generally covered by other forms of insurance. Long-term disability insurance addresses the risk of losing income due to a prolonged inability to work, while health insurance typically covers medical expenses. Property insurance handles the financial impact of damage to property. Each of these types of insurance serves a distinct purpose that differs from the core function of life insurance, which focuses on providing support in the event of death.