Tennessee Insurance Practice Exam

Which life insurance policy is known for its guaranteed minimum death benefit?

1. Term life insurance

2. Whole life insurance

3. Universal life insurance

4. Variable life insurance

The correct answer is: Variable life insurance

The life insurance policy that is known for its guaranteed minimum death benefit is whole life insurance. Whole life insurance provides a death benefit that is guaranteed, meaning the insured's beneficiaries will receive a specific payout upon the insured's death, regardless of how long the policy is in force, as long as premiums are paid. Additionally, whole life insurance policies often accumulate cash value over time, which can also be borrowed against or withdrawn. In contrast, term life insurance covers the insured for a set period and does not accumulate cash value. Universal life insurance offers flexibility in premium payments and death benefits but does not guarantee a minimum death benefit unless certain conditions are met. Variable life insurance allows for investment options that can affect the cash value and death benefit depending on the performance of the invested funds, meaning it does not guarantee a fixed death benefit. Whole life is distinct in its clear guarantee and stability, making it a common choice for individuals seeking assurance in their life insurance coverage.