Property and Casualty Insurance Practice Exam

Which type of insurance is specifically designed to handle the risk of premature death?

1. Health and Disability Insurance

2. Life Insurance

3. Property Insurance

4. Monoline Insurance

The correct answer is: Life Insurance

Life insurance is specifically designed to provide financial protection in the event of an individual’s premature death. This type of insurance offers a death benefit to beneficiaries when the insured person passes away, thereby alleviating financial burdens that could arise from lost income, debts, or funeral expenses. Life insurance helps ensure that loved ones have the necessary financial support after the policyholder's untimely passing. On the other hand, health and disability insurance focus on medical expenses and income protection due to illness or injury, property insurance covers damage or loss of tangible assets, and monoline insurance refers to a policy that provides coverage on a single line of insurance, which can include various types but not exclusively death-related risks. Therefore, the distinguishing factor of life insurance lies in its intended purpose to manage the financial implications of premature death, making it the correct answer.