LLQP Life Insurance · Component 2.1 · 30% of the exam
A client considering term to age one hundred should understand that, compared with whole life, it generally:
- provides permanent coverage at a lower premium but with little or no cash value
- Bpays dividends that can be used to reduce the premium over time
- Cbuilds a larger cash value that can be borrowed against during the client's lifetime
- Dexpires at age one hundred with a return of the premiums that have been paid
Correct answer: A) provides permanent coverage at a lower premium but with little or no cash value
Term to one hundred is permanent protection stripped of savings, so the premium is lower and the flexibility is smaller. Missing a premium can end the coverage, since there may be no value to support it.
Why the other options are wrong
- BIt is a non-participating product and pays no dividends.
- CLittle or no cash value is the defining feature of the product.
- DCoverage continues rather than expiring with a refund.
Exam tip
Term to one hundred is permanent coverage without the savings element.
Common mistake
Assuming any permanent policy will have values to fall back on.
What this tests
CISRO competency component 2.1 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Life Insurance module. Written against the published curriculum.
More from component 2
- A client has a need lasting about twenty years and compares a ten-year and a twenty-year term policy. The main point to explain is that:
- A client exercises the conversion privilege on his term policy. The permanent premium will be based on:
- A client notices that a small policy costs proportionately more per unit of coverage than a larger one. The explanation is that:
- A client wants to pay monthly rather than annually. The agent should explain that monthly payment:
- A client asks why dividends from her participating policy are not taxed like interest from a bank. The reason is that a dividend is:
- A universal life policyholder is choosing among the investment options inside her policy. She should understand that:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.