Which statement is correct regarding the premium payment schedule for whole life policies?

 Options:

Premiums are payable throughout the insured’s lifetime/coverage lasts until death of the insured Premiums are payable for a set period/coverage expires at that point Premiums are payable until age 65/coverage lasts a lifetime A single premium is paid at time of application/coverage lasts until retirement

The Correct Answer Is:

a. Premiums are payable throughout the insured’s lifetime/coverage lasts until death of the insured

Whole life insurance is a type of permanent life insurance that provides coverage for the entire lifetime of the insured individual, as long as premiums are paid according to the policy terms. Now, let’s delve into the correct answer and why the other options are not accurate:

Correct Answer Explanation:

a. Premiums are payable throughout the insured’s lifetime/coverage lasts until death of the insured

Whole life policies typically require premiums to be paid regularly throughout the insured’s lifetime. The policy provides coverage for the entirety of the insured’s life, meaning as long as the premiums are paid, the insurance remains in force until the insured’s death. Upon the insured’s death, the policy pays out the death benefit to the beneficiaries.

Explanation of Why Other Answers Are Incorrect:

b. Premiums are payable for a set period/coverage expires at that point

This statement aligns more with a term life insurance policy rather than a whole life policy. Term life insurance policies provide coverage for a specific period (e.g., 10, 20, or 30 years) and typically have fixed premiums for that duration.

However, once the term expires, the coverage terminates unless renewed or converted into a different type of policy.

c. Premiums are payable until age 65/coverage lasts a lifetime

While some life insurance policies have an age limit for premium payments (such as policies that require payments until a certain age), a whole life policy usually requires premiums to be paid throughout the insured’s entire life, not just until age 65.

Additionally, the coverage of a whole life policy extends beyond age 65, providing lifelong protection.

d. A single premium is paid at the time of application/coverage lasts until retirement

This scenario describes a single premium policy, which does exist but is different from a typical whole life policy. Single premium policies involve paying the entire premium in one lump sum at the beginning of the policy, and the coverage lasts until a specified age or event, such as retirement.

Whole life insurance policies, on the other hand, require regular premium payments throughout the insured’s life.

In summary, the correct answer aligns with the fundamental characteristics of a whole life insurance policy, which includes lifetime premium payments and coverage until the insured’s death.

Other options describe features more commonly associated with different types of life insurance policies, such as term life or single premium policies, which have distinct payment schedules and coverage terms.

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