PSI Ohio Insurance Practice Exam

What type of policy typically offers premiums that remain constant throughout the insured's life?

1. Term life insurance.

2. Whole life insurance.

3. Universal life insurance.

4. Variable life insurance.

The correct answer is: Whole life insurance.

Whole life insurance is designed to offer premiums that remain constant throughout the insured's life. This type of policy not only provides a death benefit but also accumulates cash value at a guaranteed rate, which grows over time. The predictability of the premium payments is an appealing feature for policyholders who prefer financial stability and want to plan their budgets without worrying about fluctuating costs. In contrast, term life insurance provides coverage for a specified period, usually with premiums that can increase significantly upon renewal or at the end of the term, depending on the policy structure. Universal life insurance offers flexibility in premium payments and death benefits, but the costs may vary over time. Similarly, variable life insurance has premiums that can change based on the performance of the investment options selected by the policyholder, leading to potential fluctuations in both premiums and cash value. Thus, whole life insurance stands out for its fixed premium feature, which offers certainty and peace of mind to those insured.