Oklahoma Life Producer Practice Exam

Which type of life insurance policy typically combines features of both whole life and decreasing term insurance?

1. Family income policy

2. Single premium policy

3. Adjustable life policy

4. Whole life policy

The correct answer is: Family income policy

A family income policy is designed to provide a combination of whole life insurance and decreasing term insurance. It provides a death benefit through a whole life component that lasts for the lifetime of the insured, ensuring that beneficiaries receive a financial safety net. Additionally, it includes a decreasing term component that offers a specific amount of income replacement for a set period of time (usually a defined number of years). This income is payable to the beneficiaries in the event of the insured's death during that specified term. The combination of these features allows the policy to provide immediate income protection for dependents while also accruing cash value over time, which is typical of whole life policies. Ultimately, this structure is beneficial for individuals looking to protect their family's financial future in a manageable way. In contrast, single premium policies require a one-time payment for coverage, adjustable life policies provide flexibility in premium and benefit adjustments, and whole life policies focus on a guaranteed death benefit and cash value accumulation without the decreasing term feature present in family income policies.