Chapter 3 (Whole life insurance)

Question 1

____________ life insurance is a general term used to refer to various forms of life insurance policies that build cash value and remain in effect for the entire life of the insured (or until age 100) as long as the premium is paid. The most common type of permanent insurance is whole life.

Answer 1

Permanent

Question 2

___________ provides lifetime protection, and includes a savings element (or cash value).

Answer 2

Whole life insurance

Question 3

Level premium

Answer 3

the premium for whole life policies is based on the issue age; therefore, it remains the same throughout the life of the policy.

Question 4

Death benefit

Answer 4

the death benefit is guaranteed and also remains level for life.

Question 5

Cash value

Answer 5

the cash value, created by the accumulation of premium, is scheduled to equal the face amount of the policy when the insured reaches age 100 (the policy maturity date), and is paid out to the policyowner.

Question 6

Living benefits

Answer 6

the policyowner can borrow against the cash value while the policy is in effect, or can receive the cash value when the policy is surrendered

Question 7

___________ insurance provides lifetime (permanent) protection and accumulates cash value.

Answer 7

Whole life

Question 8

____________ (also referred to as ordinary life or continuous premium whole life) is the basic whole life policy (illustrated above).

Answer 8

Straight life

Question 9

_____________ is designed to provide a level death benefit to the insured’s age 100 for a one-time, lump-sum payment

Answer 9

Single premium whole life (SPWL)