Arizona Life and Health Practice Exam

Which of the following statements about straight whole life insurance is NOT true?

1. Policy protection lasts for the insured's lifetime

2. Premiums remain constant throughout the life of the policy

3. Cash value builds over time

4. Policy protection expires at age 65

The correct answer is: Policy protection expires at age 65

The statement that policy protection expires at age 65 is not true regarding straight whole life insurance. This type of insurance is designed to provide coverage for the entire lifetime of the insured, as long as the premiums are paid. Unlike term insurance, which provides coverage for a specified period, straight whole life insurance guarantees lifetime protection and does not have an expiration age like 65. On the other hand, the other statements accurately reflect the characteristics of straight whole life insurance. The policy protection indeed lasts for the insured's lifetime, providing peace of mind that beneficiaries will receive a death benefit no matter when the insured passes away, as long as the policy is in force. Additionally, premiums are structured to remain constant throughout the life of the policy, making it easier for policyholders to budget for their insurance costs. Lastly, a cash value component is built over time within whole life policies, providing an investment feature that policyholders can access under certain conditions. This cash value grows on a tax-deferred basis, further adding to the benefits of having a whole life insurance policy.