Question

on a state exam, which life insurance policy type involves the most investment risk to the policy owner?
whole life
universal life
variable life
term life

which of the following best describes whole life insurance?
permanent protection with flexible premiums
permanent protection with fixed premiums and guaranteed cash value
temporary protection with fixed premiums
temporary protection with increasing death benefit

adjustable life insurance is best described as a combination of which two policy types?
term and variable life
whole life and universal life

Explanation:

1. For the first question: Variable life policies invest in sub-accounts like mutual funds, so the policy owner bears full investment risk, unlike whole (guaranteed cash value), universal (minimum guaranteed return), and term (no investment component) life.
2. For the second question: Whole life insurance provides lifelong (permanent) coverage, has fixed premium payments, and builds a guaranteed cash value over time, distinguishing it from flexible-premium universal life and temporary term life options.
3. For the third question: Adjustable life combines the permanent coverage structure of whole life with the flexible premium/benefit features of universal life, allowing policyholders to adjust terms as needed.

Answer:

1. Variable life
2. Permanent protection with fixed premiums and guaranteed cash value
3. Whole life and universal life