Tennessee Insurance Practice Exam

What is a characteristic of a Straight Life policy?

1. Premiums are refundable upon death

2. Renewable without evidence of insurability

3. Premiums are payable as long as coverage is in force

4. Cash value varies based on market performance

The correct answer is: Premiums are payable as long as coverage is in force

A Straight Life policy, also known as whole life insurance, is designed to provide lifelong coverage as long as the premiums are paid. One of its fundamental characteristics is that premiums are due for the entire duration of the policy, which matches the insured’s lifetime. This ensures that the policy remains active and provides a death benefit whenever the insured passes away, as long as the premiums have been maintained. The nature of a Straight Life policy means that it accumulates cash value over time. However, the relationship of cash value to market performance is not a characteristic of this type of policy, as that would be indicative of variable life insurance. Additionally, while some policies may offer a return of premiums under certain conditions, this is generally not a standard feature of a Straight Life policy. Furthermore, the option for renewability without requiring evidence of insurability pertains more to term life insurance types rather than Straight Life policies, where premiums generally remain level or are fixed over the policy’s lifetime.