Oklahoma Life Producer Practice Exam

A Family Income Policy is a combination of which types of insurance?

1. Term and universal life

2. Whole life and decreasing term

3. Whole life and level term

4. Endowment and term life

The correct answer is: Whole life and decreasing term

A Family Income Policy is designed to provide financial protection for a family in the event of the breadwinner's death. It typically combines whole life insurance and a decreasing term insurance component. The whole life insurance provides a permanent death benefit and builds cash value over time, ensuring that a portion of the financial needs of the family is covered for the long term. On the other hand, the decreasing term insurance component is structured to provide an income benefit for a specific period, usually until the children are grown or until other financial responsibilities are met. As time progresses, the amount of coverage under the term component decreases, reflecting the diminishing financial needs of the family as they adjust to life without the deceased. This combination is particularly effective for families, as it not only secures a steady income replacement but also contributes towards building savings through the whole life policy, offering both immediate and long-term financial support.