Maryland Life and Health Insurance License Practice Exam

What type of life insurance policy is designed for two people and pays upon the first death?

1. Joint policy

2. Term policy

3. Universal policy

4. Whole life policy

The correct answer is: Joint policy

A joint policy is specifically designed for two individuals, and it is structured to pay out the death benefit upon the death of the first insured person. This type of policy is often used by couples or business partners who wish to provide financial protection to their beneficiaries in the event of one person's death, making it an efficient way to ensure that the surviving party can manage any financial responsibilities or obligations that arise as a result of that death. In contrast, the other types of policies listed serve different purposes. A term policy provides coverage for a specified period and only pays out if the insured dies within that term, but it does not specifically cater to two people. Similarly, universal and whole life policies are types of permanent insurance that provide coverage for the insured's lifetime and build cash value over time, but they are generally issued to a single individual rather than designed to cover two lives simultaneously. Thus, the joint policy stands out as the correct answer for its unique structure aimed at covering two insured individuals.