Massachusetts Life Producer Practice Exam

Which of the following statements about straight whole life insurance is true?

1. Policy protection continues until the insured reaches age 100.

2. Premiums are usually lower than those for term insurance.

3. Policy protection normally expires at age 65.

4. Dividends are guaranteed to be paid annually.

The correct answer is: Policy protection continues until the insured reaches age 100.

The statement that policy protection continues until the insured reaches age 100 is accurate for straight whole life insurance. This type of policy is designed to provide lifetime coverage, meaning that as long as premiums are paid, the insurance will remain in effect until the policyholder reaches the age of 100. If the insured is still alive at that age, the policy often matures and may pay out a benefit or cash value. This characteristic distinguishes whole life insurance from other types of policies, such as term life, which only provide coverage for a specified period or until a certain age, such as 65 in some cases. Additionally, premiums for whole life insurance are generally higher than for term insurance because of the lifetime coverage provided and the additional cash value component. While some whole life policies may pay dividends, these are not guaranteed and can vary based on the insurer’s performance and profit. Therefore, the correct answer accurately reflects the nature of straight whole life insurance.