Tennessee Life Producer Practice Exam

What does the term "Straight" in Whole Life insurance refer to?

1. The fixed interest rate

2. The duration of premium payments

3. The level of coverage provided

4. The absence of premium increases

The correct answer is: The duration of premium payments

In the context of Whole Life insurance, the term "Straight" specifically refers to the duration of premium payments. A "Straight" Whole Life policy requires the policyholder to pay premiums for the life of the policy, typically until they reach a specified age, such as 100 years old, or until the insured passes away. This structure creates a consistent and predictable cost throughout the life of the policy, which can be important for budgeting and financial planning. The other choices, while they may relate to aspects of Whole Life insurance, do not define "Straight." The fixed interest rate pertains to how the cash value grows, but it is not tied to the "Straight" designation. The level of coverage provided is a characteristic of the policy itself, not about the premium payment structure. Finally, the absence of premium increases may describe some Whole Life products, but the term "Straight" does not specifically refer to that feature. Rather, it emphasizes the commitment to making payments consistently over the life of the policy.