A Return of Premium life insurance policy is categorized as which of the following?

A Return of Premium life insurance policy is categorized as a type of term life insurance. Unlike traditional term life policies, which provide a death benefit but do not return any premiums paid if the insured outlives the policy term, a Return of Premium policy refunds the premiums at the end of the term if the insured is still alive. This feature makes it unique among term policies and adds an element of value to the policyholder, as they do not lose the money they paid in premiums.

While the answer selected implies that a Return of Premium policy falls under whole life and increasing term, it should be understood that it is primarily a term product, as its basic framework follows that of term life insurance. This categorization allows it to be distinguished from other types of policies like whole life, universal life, and variable life, which have different structures and purposes, such as cash value accumulation and investment components.

The key aspect to remember is that a Return of Premium policy is primarily recognized as a form of term insurance, as it covers a specified period and offers a death benefit, along with the return of premiums at the end of the term.