Future Business Leaders of America (FBLA) Business Calculations Practice Test

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Dive into the FBLA Business Calculations Test. Sharpen your analytical skills with multiple-choice questions and gain insights with detailed explanations. Excel in your exams!

Practice this question and more.

Which type of insurance provides pure protection without an investment component?

Whole life insurance
Universal life insurance
Term insurance
Variable life insurance

The correct answer is: Term insurance

Term insurance is designed purely for protection against the risk of death during a specified period. It provides a death benefit to the policyholder's beneficiaries if the insured passes away within the term of the policy. The key characteristic of term insurance is that it does not have any cash value or investment component; it simply serves as a financial safety net during the coverage term. In contrast, whole life insurance and universal life insurance include an investment component that builds cash value over time, allowing policyholders to take loans against that cash value or withdraw from it. Variable life insurance also includes an investment aspect, allowing policyholders to invest in various securities, which means its value can fluctuate based on market conditions. Thus, term insurance stands out for offering purely protection without any additional investment features.