Massachusetts Life Producer Practice Exam

Which feature is NOT typically associated with whole life insurance?

1. The initial premium is lower than for term insurance.

2. It accumulates cash value over time.

3. Premiums remain level throughout the policy term.

4. Coverage is guaranteed for the lifetime of the insured.

The correct answer is: The initial premium is lower than for term insurance.

Whole life insurance is known for certain key features that differentiate it from other types of life insurance, particularly term insurance. One of the primary characteristics of whole life insurance is that it accumulates cash value over time, which allows policyholders to build savings that can be accessed through loans or withdrawals. Premiums for whole life insurance remain level throughout the policy’s duration, providing the stability of knowing that payments will not increase as the insured ages. Additionally, whole life insurance guarantees coverage for the lifetime of the insured, as long as premiums are paid, ensuring that beneficiaries will receive a death benefit upon the insured's passing. The option referring to the initial premium being lower than for term insurance does not align with the typical characteristics of whole life insurance. In fact, whole life policies generally have higher initial premiums compared to term insurance because they combine a death benefit with an investment component (the cash value). This aspect reflects the comprehensive nature of whole life policies, which provide lifelong coverage and savings potential.