Question

12 saurab is a 43 - year - old engineer planning to purchase a permanent life insurance policy. he wants the premiums to remain the same without increasing in the future and wishes to be able to obtain policy loans. his agent recommends a participating whole life insurance policy, and saurab asks if there are any disadvantages associated with a whole life policy. which of the following disadvantages will the agent mention?
qw9owusvwwnocncvqwppz0hyvib0ut09
a. coverage is not guaranteed for life if the life insured’s health declines.
b. policy dividends are not guaranteed.
c. premiums are not guaranteed for life.
d. the policy does not offer nonforfeiture benefits.
qw9owusvwwnocncvqwppz0hyvib0ut09
next question submit exam

Explanation:

To solve this, we analyze each option based on whole life insurance policy features:

• Option a: Whole life insurance does guarantee coverage for life, regardless of health declines. Eliminate a.
• Option b: Policy dividends in participating whole life policies are based on the insurer’s performance and are not guaranteed (they are “participating” in surplus, but surplus isn’t guaranteed). This is a disadvantage.
• Option c: Whole life premiums are guaranteed for life (fixed, level premiums). Eliminate c.
• Option d: Whole life policies do offer nonforfeiture benefits (e.g., cash surrender value, reduced paid - up insurance). Eliminate d.

Answer:

b. Policy dividends are not guaranteed.