Life & Health Insurance Exam (National Portion)Life InsuranceEasy
A 45-year-old individual wants a life insurance policy that provides a guaranteed death benefit, guaranteed cash value growth, and level premiums for life. Which type of policy best fits these requirements?
- AWhole Life
- BTerm Life
- CUniversal Life
- DVariable Life
Show answer & explanationAnswer & explanation
Correct answer: A. Whole Life
Whole Life insurance is characterized by a guaranteed death benefit, guaranteed cash value accumulation, and level premiums for the entire life of the insured.
Why the other options are wrong
- B. Term Life provides coverage for a specific period and does not accumulate cash value.
- C. Universal Life has flexible premiums and adjustable death benefits.
- D. Variable Life's cash value fluctuates based on market performance and is not guaranteed.
Whole Life Insurance
A type of permanent life insurance that provides guaranteed coverage for the insured's entire life, with level premiums and guaranteed cash value growth.
- Permanent coverage (to age 100 or 121)
- Guaranteed cash value accumulation
- Level premiums
Memory trick: Permanent policies are like a tree, growing cash value over time, but some are more predictable than others.