Florida 2-15 Life, Health and Variable Annuity AgentFlorida Laws and Regulations Specific to Life Insurance and AnnuitiesMedium
A Florida insurance agent is presenting a life insurance policy to a prospective client. The agent emphasizes that the policy's cash value growth is guaranteed at a minimum interest rate and that the death benefit is also guaranteed. What type of life insurance policy is the agent most likely describing?
- AUniversal Life
- BVariable Universal Life
- CWhole Life
- DTerm Life
Show answer & explanationAnswer & explanation
Correct answer: C. Whole Life
Whole Life insurance is characterized by guaranteed cash value growth at a minimum interest rate, a guaranteed level premium, and a guaranteed death benefit for the insured's entire life. This aligns with the agent's description.
Why the other options are wrong
- A. Universal Life offers flexible premiums and a death benefit that can vary, and while it has cash value, its growth is not always guaranteed at a fixed minimum rate like Whole Life.
- B. Variable Universal Life has no guaranteed cash value growth or death benefit, as it's market-linked.
- D. Term Life has no cash value and only provides coverage for a specific period.
Whole Life Insurance
A permanent life insurance policy that provides guaranteed level premiums, a guaranteed death benefit, and guaranteed cash value growth.
- Guaranteed cash value growth.
- Guaranteed level death benefit.
- Guaranteed level premiums.
- Coverage for the entire life of the insured.
Memory trick: Whole life is 'whole-y' guaranteed.