LLQP Life Insurance · Component 2.1 · 30% of the exam
A guaranteed whole life policy differs from an adjustable whole life policy in that:
- AThere is no difference in practice, since both are permanent policies with cash values and a level premium structure throughout
- BAdjustable whole life is term insurance that the insurer may convert to permanent coverage at its discretion
- CGuaranteed whole life has no death benefit until the cash value reaches the face amount, whereas adjustable pays from issue
- In guaranteed whole life the premium and values are fixed at issue; in adjustable the insurer may adjust them
Correct answer: D) In guaranteed whole life the premium and values are fixed at issue; in adjustable the insurer may adjust them
The curriculum lists 'guaranteed or adjustable whole life' under policy reserve. Adjustable contracts share experience risk with the policyholder within limits; guaranteed contracts put it entirely on the insurer, usually at a higher premium.
Why the other options are wrong
- AThe difference is who bears experience risk.
- BAdjustable whole life is permanent insurance.
- CBoth have death benefits.
Exam tip
Guaranteed = fixed by contract. Adjustable = insurer may adjust within limits. Read the contract.
Common mistake
Assuming every whole life premium is guaranteed for life.
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.