Rhode Island Life Insurance Practice Exam

What is one key characteristic of a whole life insurance policy?

1. Flexible premiums

2. No cash value

3. Guaranteed death benefit

4. Annual renewals required

The correct answer is: Guaranteed death benefit

A distinguishing feature of a whole life insurance policy is the guaranteed death benefit. This means that as long as the premiums are paid, the policyholder's beneficiaries will receive a predetermined death benefit upon the policyholder's passing, regardless of when that occurs. This assured payout is one of the fundamental reasons individuals choose whole life insurance, as it provides financial security and peace of mind, knowing that their loved ones will be financially supported. In addition to the guaranteed death benefit, whole life policies typically accumulate cash value over time, which can be accessed during the policyholder's lifetime. This accumulation of cash value, along with the predictability of the death benefit, makes whole life insurance a reliable tool for long-term financial planning.