Oklahoma Life Producer Practice Exam

What two features do renewable and convertible policies have in common?

1. Guaranteed insurability and increase in premium based on attained age

2. Guaranteed insurability and no increase in premium

3. Cash value accumulation and renewal options

4. Whole life benefits and limited term

The correct answer is: Guaranteed insurability and increase in premium based on attained age

Renewable and convertible policies share important features that cater to the policyholder's flexibility and security in managing their insurance needs. One key feature is guaranteed insurability, which allows a policyholder to obtain additional coverage without having to provide evidence of insurability at the time of conversion or renewal. This is particularly beneficial for individuals who may develop health issues over time, as it ensures they can maintain or increase their life insurance coverage. Another common feature between these policies is the increase in premium based on attained age. As a policyholder ages, the risk associated with providing coverage naturally increases, which often results in higher premiums upon renewal for renewable policies or when converting from one type of policy to another in convertible policies. Both features emphasize that while protection can be extended, the policyholder must be prepared for adjustments in premiums as they age, reflecting the changing nature of risk in life insurance underwriting. By understanding these shared characteristics, policyholders can make informed decisions about their insurance options, ensuring they have coverage that meets their evolving needs over their lifetime.