Oklahoma Life Producer Practice Exam

Why might someone choose a Whole Life policy over a Term policy?

1. Better annual returns

2. Cash value accumulation

3. Lower upfront costs

4. Limited coverage

The correct answer is: Cash value accumulation

Choosing a Whole Life policy over a Term policy is often based on the cash value accumulation feature that Whole Life offers. Whole Life insurance provides both a death benefit and a savings component that builds cash value over time. This cash value grows at a guaranteed rate and can be accessed by the policyholder through loans or withdrawals, providing financial flexibility. In contrast, Term policies typically do not build cash value and are purely focused on providing death benefit coverage for a specified period. Because of this key feature, Whole Life policies can be seen as a long-term financial planning tool, allowing policyholders to accumulate wealth while simultaneously securing life insurance coverage. Additionally, Whole Life policies offer lifelong coverage as long as premiums are paid, while Term policies only provide coverage for a limited time. This aspect of permanence combined with the cash value accumulation makes Whole Life policies appealing for those looking to secure both insurance protection and a savings vehicle.