The correct answer is “Whole Life” insurance. Whole Life insurance offers permanent life coverage with premiums that are payable for life. This type of life insurance provides lifelong protection and includes a savings or cash value component.

Let’s explore in detail why “Whole Life” is the correct answer and why the other options (Credit Life, Renewable Term Life, and Endowment) do not offer permanent life coverage with premiums payable for life.

Correct Answer: Whole Life Insurance

Whole Life insurance, also known as “permanent life insurance,” is designed to provide coverage for an individual’s entire lifetime. Here’s why “Whole Life” is the correct answer:

1. Lifetime Coverage:

Whole Life insurance policies offer coverage for the policyholder’s entire life, as long as the premiums are paid. This means that the policy does not expire after a specific term, as is the case with term life insurance.

2. Premiums Payable for Life:

With Whole Life insurance, the premiums are designed to be paid for the policyholder’s entire life. This ensures that coverage remains in force, and the policyholder’s beneficiaries will receive the death benefit when the insured individual passes away, provided premiums are paid as scheduled.

3. Cash Value Accumulation:

Whole Life insurance policies also include a savings or cash value component. A portion of the premium payments goes into this cash value account, which accumulates over time. Policyholders can access this cash value during their lifetime, often through loans or withdrawals.

4. Guaranteed Death Benefit:

Whole Life insurance policies come with a guaranteed death benefit, which is the amount paid to the beneficiaries upon the death of the insured. This death benefit remains in place throughout the policyholder’s lifetime, provided premiums are paid as agreed.

5. Level Premiums:

Whole Life insurance typically has level premiums, which means that the premium amount remains consistent throughout the life of the policy. This predictability makes it easier for policyholders to budget for the premiums payable for life.

6. Dividends and Non-forfeiture Options:

Some Whole Life policies may pay dividends based on the insurance company’s performance. Policyholders can use these dividends to enhance their cash value or pay premiums. Additionally, Whole Life policies often offer non-forfeiture options, such as paid-up insurance, which provide reduced coverage without further premium payments.

Incorrect Options and Explanations:

Credit Life:

Credit Life insurance is a type of insurance that pays off a specific debt, such as a mortgage or auto loan, in the event of the policyholder’s death. It does not offer permanent life coverage with premiums payable for life but rather serves the purpose of debt protection.

Renewable Term Life:

Renewable Term Life insurance provides coverage for a specific term, which can be renewed at the end of each term. While it allows for the renewal of coverage, it does not offer permanent life coverage, and premiums can increase upon renewal.

Endowment:

Endowment policies are designed to provide a lump-sum payment, known as the endowment amount, to the policyholder if they survive a specific maturity date. Endowment policies have a set term and do not offer the same permanent life coverage as Whole Life insurance.

In summary, “Whole Life” insurance is the correct answer because it provides permanent life coverage with premiums payable for life. It includes a cash value component, offers a guaranteed death benefit, and features level premiums, making it a lifelong protection and savings solution.

The other options—Credit Life, Renewable Term Life, and Endowment—are different types of life insurance policies with distinct purposes and characteristics, none of which offer permanent life coverage with lifelong premiums.