New Jersey Life Producer Practice Exam

What type of insurance policy provides lifetime protection with premiums payable for a limited time?

1. Term Life Insurance

2. Whole Life Insurance

3. Universal Life Insurance

4. Endowment Policy

The correct answer is: Whole Life Insurance

Whole Life Insurance is designed to provide lifetime protection, which means that the policy remains in force for the entire lifetime of the insured, as long as the premiums are paid. Unlike term life insurance, which offers coverage for a specified period without any cash value component, whole life insurance accumulates cash value over time, which can be borrowed against or withdrawn. What distinguishes whole life insurance in this context is the premium payment structure. This type of policy typically allows for premiums to be paid for a limited time, often until the insured reaches a certain age or for a specific number of years. After this period, the insurance remains in effect without any further premium payments required. This feature makes it appealing to those who want the lifelong security of life insurance but prefer the ability to stop making payments after a set timeframe. Understanding whole life insurance is crucial as it balances the need for long-term coverage while providing flexibility in funding the policy. This makes it distinct from other types that either lack lifelong coverage or do not have this specific premium payment structure.