L&HTexaseasy

Which statement BEST describes Interest-Sensitive Whole Life insurance?

APremiums vary each year based on the insurer's current mortality charges

BThe death benefit fluctuates with stock market performance in a separate account

CPremiums are fixed and cash value grows at the same rate every year regardless of market conditions

Cash value earns a declared rate that may change but never falls below a guaranteed minimum

Why this is the answer

Interest-Sensitive Whole Life (also called current-assumption whole life) keeps the fixed-premium structure of traditional whole life but replaces the fixed dividend-based growth with a declared current interest rate the insurer announces periodically. If market rates rise, the declared rate can exceed the guaranteed minimum, growing cash value faster. If rates fall, the contract guarantees a floor rate so policyowners never earn less than that minimum. Premiums are typically fixed, distinguishing it from Universal Life where premium payments are flexible. This product was popular in the 1980s as an alternative to UL that retained whole-life simplicity. TX Outline §I.B. See TX Outline §I.B.

Studying for the Texas Life & Health exam?

This question comes from our L&H bank. Take a free practice test — no signup.

Free L&H practice test Life & Health exam guide