LLQP Life Insurance · Component 2.1 · 30% of the exam
The main drawback of T-100 compared with whole life is:
- AIt is more expensive than whole life, since the insurer must reserve for a benefit that is certain to be paid
- It provides little or no cash value or non-forfeiture benefits, so a lapse after many years leaves nothing
- CIt cannot be issued to anyone over 40, since the level premium would be unaffordable at older issue ages
- DIt has no death benefit after age 85, when the insurer's obligation converts to a return of premiums
Correct answer: B) It provides little or no cash value or non-forfeiture benefits, so a lapse after many years leaves nothing
The lower premium is bought by giving up the savings element. A client who might need to stop paying should understand that, unlike whole life, T-100 generally offers no reduced paid-up or extended term fallback.
Why the other options are wrong
- AT-100 is less expensive than whole life.
- CThere is no such age limit on T-100.
- DT-100 has a death benefit; that is its entire purpose.
Exam tip
The price of T-100's lower premium is the absence of non-forfeiture values: a lapse late in life leaves nothing.
Common mistake
Overlooking that a client who might stop paying has no fallback with T-100.
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.