Question

All of the following statements concerning whole life insurance are correct EXCEPT: a. Whole life insurance provides for the payment of the policy face amount upon the death of the insured, regardless of when death occurs. b. If the whole life insurance premiums are to be paid throughout the insured's lifetime, the insurance is known as limited-payment; if the whole life insurance premiums are to be paid only during a specified period, the insurance is designed as ordinary life. c. Whole life insurance offers permanent protection with cash values, and it can be either participating or nonparticipating. d. The protection afforded by the whole life insurance contract is permanent-the term never expires, and the policy never has to be renewed or converted.

Answer 1

Answer: D - The protection afforded by the whole life insurance contract is permanent-the term never expires, and the policy never has to be renewed or converted.

Explanation: Whole life insurance is a contract between the insured and insurer of the life insurance policy in which the insurer will pay the death benefit of the policy to the policy's beneficiaries when the insured dies. It is guaranteed to remain in force for the insured's entire lifetime, provided required premiums are paid, or to the maturity date.

A whole life insurance policy is said to "mature" at death or the maturity age of 100, whichever comes first. The maturity date will be the "policy anniversary nearest age 100". The policy becomes a "matured endowment" when the insured person lives past the stated maturity age.