Oklahoma Life Producer Practice Exam

What type of life policy provides fixed death benefits, guaranteed cash values, and fixed premiums?

1. Universal life

2. Term life

3. Whole life

4. Variable life

The correct answer is: Whole life

Whole life policies are designed to offer a combination of fixed death benefits, guaranteed cash values, and fixed premiums throughout the life of the policyholder. This type of policy is structured to ensure that the policy remains in force as long as the premiums are paid, typically until the insured's death or the end of a specified term. The fixed death benefit means that the amount of insurance coverage remains constant, providing the beneficiaries a predictable financial payout upon the insured's death. The guaranteed cash value is a feature that allows policyholders to accumulate savings over time, as part of their premium payments is directed towards building this cash value, which grows at a guaranteed rate set by the insurer. Fixed premiums mean that the cost of maintaining the policy does not change over its lifetime, making budgeting easier for the policyholder. In contrast, other types of life insurance policies, such as universal life, term life, and variable life, have different structures and features. Universal life policies offer flexible premiums and adjustable death benefits but do not guarantee a fixed cash value or fixed premiums. Term life provides death benefit coverage for a specified period without accumulating any cash value. Variable life policies, while they do have a cash value component, allow policyholders to invest that cash value in various investment options