California Life-Only & Accident and Health AgentLife InsuranceMedium
A 40-year-old client is evaluating different life insurance policies. They are looking for a policy that offers permanent coverage, level premiums for life, and guaranteed cash value growth. Additionally, they desire the potential to receive policy dividends. Which type of life insurance policy would best meet these requirements?
- AParticipating Whole Life
- BTerm Life
- CUniversal Life
- DNon-Participating Whole Life
Show answer & explanationAnswer & explanation
Correct answer: A. Participating Whole Life
Participating whole life insurance provides permanent coverage, level premiums, guaranteed cash value, and the potential to receive dividends, which are unique to participating policies and represent a return of excess premium.
Why the other options are wrong
- B. Term life insurance provides temporary coverage with no cash value and no dividends.
- C. Universal life offers flexible premiums and adjustable death benefits, but its cash value growth is not always guaranteed at a fixed rate, and it typically does not pay dividends.
- D. Non-participating whole life offers permanent coverage, level premiums, and guaranteed cash value, but does not pay dividends.
Participating Whole Life Insurance
A type of permanent life insurance that offers a guaranteed death benefit, level premiums, guaranteed cash value growth, and the potential to receive policy dividends from the insurer's surplus.
- Permanent coverage
- Level premiums
- Guaranteed cash value
- Eligible for policy dividends
Memory trick: Participating policies share the profits, non-participating don't.