Oklahoma Life Producer Practice Exam

Variable Whole Life insurance includes what kind of monitoring?

1. Passive management only

2. Active investment management

3. No management

4. High-risk management only

The correct answer is: Active investment management

Variable Whole Life insurance incorporates active investment management, which is a key feature that distinguishes it from other types of life insurance. This type of policy allows policyholders to allocate a portion of their premiums to a variety of investment options, such as mutual funds, stocks, or bonds. The performance of these investments directly affects the cash value and, in some cases, the death benefit of the policy. With active investment management, the policyholder or the insurance company can make strategic decisions based on market conditions and investment performance. This dynamic approach allows for the potential growth of the policy's cash value, as well as the possibility of higher returns compared to more conservative, non-variable insurance policies. Thus, the active management aspect is crucial because it provides the opportunity for policyholders to engage with their investments and adjust their portfolios according to their risk tolerance and financial goals. Understanding that Variable Whole Life requires active management helps in grasping the responsibilities and opportunities it presents for both the policyholder and the insurance provider.