Rhode Island Life Insurance Practice Exam

Disable ads (and more) with a membership for a one time $4.99 payment

Prepare for the Rhode Island Life Insurance Exam with comprehensive quizzes. Utilize flashcards and multiple choice questions, each equipped with hints and detailed explanations to ensure you're well-prepared for your certification!

Practice this question and more.

What type of premium is associated with a whole life policy?

Adjustable
Variable
Level
Decreasing

The correct answer is: Level

A whole life policy is associated with a level premium. This means that the premium amount remains constant throughout the life of the policyholder, ensuring predictability in premium payments. The level premium is designed to cover the policyholder's risk of mortality as they age, as well as to build cash value over time. Whole life insurance tends to provide a death benefit that is guaranteed to be paid out, and the cash value typically grows at a steady rate, reinforcing the stability offered by the level premium structure. In contrast, adjustable premiums fluctuate based on the performance of the insurance company or the policyholder's changes in coverage. Variable premiums can change based on investment performance within the policy, and decreasing premiums are often associated with term policies, where the coverage amount decreases over time as the policy is in force. Each of these options does not align with the consistent and predictable nature of the whole life policy premium structure.