Question 1

What type of life insurance provides coverage for a specified period and pays a death benefit only if the insured dies during that period?

Accepted Answer

Term life insurance. It provides pure death protection with no cash value accumulation, and coverage expires at the end of the term.

Question 2

What type of life insurance provides lifetime coverage and builds cash value on a guaranteed, fixed basis?

Accepted Answer

Whole life insurance. Premiums are fixed, the death benefit is guaranteed, and cash value grows at a guaranteed rate tax-deferred.

Question 3

How does universal life insurance differ from whole life insurance in terms of premium flexibility?

Accepted Answer

Universal life allows the policyowner to vary the amount and timing of premium payments within certain limits, while whole life requires fixed scheduled premiums.

Question 4

In a variable life insurance policy, where are the cash values invested?

Accepted Answer

Cash values are invested in separate accounts chosen by the policyowner, such as stock or bond sub-accounts, meaning the cash value and death benefit can fluctuate based on investment performance.

Question 5

What is an endowment policy, and when does it pay its face amount?

Accepted Answer

An endowment policy pays the face amount either upon the insured's death or when the policy matures (reaches its endowment date), whichever comes first.

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