Tennessee Life Producer Practice Exam

Which characteristic is associated with a Straight Life policy?

1. Premiums are payable until the insured reaches age 100

2. Premiums are payable for as long as there is insurance coverage in force

3. Death benefits are only paid after age 65

4. Cash value accumulates faster than in term policies

The correct answer is: Premiums are payable for as long as there is insurance coverage in force

A Straight Life policy, also known as a whole life policy, has premiums that are payable for the life of the insured as long as the policy is in force. This means that the policyholder pays regular premiums throughout their lifetime, and in return, the policy provides a death benefit to beneficiaries upon the insured's death, regardless of when that occurs. The characteristic of premiums being payable for as long as there is insurance coverage in force accurately reflects the nature of the Straight Life policy. Unlike term policies that only provide coverage for a specific period, a Straight Life policy continues as long as premiums are paid, which could last throughout the insured’s life. This understanding is critical for those studying life insurance concepts since it differentiates whole life insurance from other types, such as term life policies where coverage is limited to a set time frame. It is also essential to know that options related to age restrictions for benefits or comparisons with term policies' cash value accumulation don’t align with the fundamental features of a Straight Life policy, which focuses primarily on lifelong coverage.