IIAP Ordinary Life (OL) Practice Exam

A 25-year life policy is designed to provide coverage for the entire duration of the policy term, which means that, at the end of 25 years, the policy will remain in-force and continue to provide coverage. This is distinct from a 25-year endowment policy, which pays out a sum insured at the end of the policy term if the insured individual is still alive, effectively terminating the contract at that point.

In the case of a life policy, even beyond the 25 years, provided the insured continues to pay premiums (if applicable after that initial term), the coverage could potentially continue. This ongoing coverage aspect highlights the intrinsic purpose of a life policy—to provide financial protection regardless of the policy's age, as long as the policyholder adheres to any stipulated terms.

While no further premiums are paid for both policy types after the specified terms end, and the contract being terminated or the sum insured being paid is not applicable for the life policy, the focus remains on the continuous existence of the policy beyond the initial 25 years, which is not the case with an endowment policy. Therefore, the key difference lies in the continuity of insurance coverage, making the assertion about the life policy's status at the end of its term the correct