Chartered Life Underwriter Practice Exam 2026 - Free CLU Practice Questions and Study Guide

The two primary types of life insurance are indeed term life insurance and whole life insurance. Term life insurance provides coverage for a specific period, which can range from one year to several decades, and pays a death benefit only if the insured passes away during that term. It is often more affordable and is designed to provide financial protection during crucial years, such as while raising children or paying off a mortgage.

Whole life insurance, on the other hand, offers coverage for the entire lifetime of the insured, as long as premiums are paid. This type of policy also includes a cash value component that grows over time, providing a potential savings or investment element alongside the death benefit. This combination of lifetime coverage and cash value makes whole life insurance a fundamental component of many financial planning strategies.

The other options presented do not represent the main categories of life insurance. Health insurance pertains specifically to medical coverage rather than life insurance. Disability insurance is a separate category that provides income replacement in the event of a disability, and while universal life insurance and endowment policies are types of permanent life insurance, they are not the primary distinctions made between term and whole life insurance.