Massachusetts Life Producer Practice Exam

Which of these life insurance policies does NOT contain a cash value provision?

1. Whole life

2. Universal life

3. Decreasing term life

4. Variable life

The correct answer is: Decreasing term life

The correct answer pertains to decreasing term life insurance, which is a type of policy that does not accumulate cash value over time. Unlike whole life, universal life, and variable life policies, which are designed to build cash value as a portion of the premiums paid is set aside for this purpose, decreasing term life insurance provides a death benefit that decreases over the term of the policy. In a decreasing term life insurance policy, the policyholder pays a premium for a specified period, and if the insured passes away during that time, the beneficiary receives a payout. However, because this type of policy is intended purely for providing a death benefit, there is no savings or investment component that would lead to a cash value accumulation. This differentiates it clearly from the other life insurance options listed, which include cash accumulation features as part of their design.