Oklahoma Life Producer Practice Exam

Which type of life insurance is characterized by both fixed premiums and a minimum guaranteed death benefit?

1. Whole Life insurance

2. Universal Life insurance

3. Variable Whole Life insurance

4. Term Life insurance

The correct answer is: Variable Whole Life insurance

The correct choice captures an important feature of life insurance products. Whole Life insurance provides both fixed premiums and a minimum guaranteed death benefit. This type of policy guarantees that the insured amount remains the same throughout the life of the policy, regardless of the insured's age or health condition at renewal. It combines a death benefit with a savings component, which accumulates cash value over time at a guaranteed interest rate. The fixed premium aspect is a significant appeal of whole life policies, as it means that policyholders can budget their premium payments without the risk of fluctuation. This stability makes it particularly attractive for individuals looking for predictable insurance expenses and a lifelong coverage option. In contrast, universal life insurance offers flexible premiums but not necessarily a fixed premium structure, which can lead to variations in cash value and benefits. Variable whole life insurance includes investment components that can change the value of the policy based on the performance of investment options. Term life insurance is designed to provide coverage for a specific period—typically offering no cash value and no accumulation of savings—therefore, it does not fit the characteristics described in the question.