South Carolina Life Insurance Practice Exam

What type of whole life insurance policy requires a single payment of premium at inception and endows at age 100?

1. Universal Life Insurance

2. Single Premium Whole Life

3. Whole Life Comprehensive

4. Term Life Insurance

The correct answer is: Single Premium Whole Life

The correct choice is Single Premium Whole Life because this type of policy is designed to be paid in full with a single premium payment at the time of purchase. The endowment age, typically set at age 100, means that the policy is guaranteed to accumulate a cash value that matches the death benefit by that age. If the insured reaches age 100, the insurer pays out the face value of the policy to the policyholder, effectively marking the endowment of the policy. In contrast, Universal Life Insurance involves flexible premium payments and death benefits, without a fixed endowment age of 100. Whole Life Comprehensive is not a standard term commonly used in the industry, and it may refer to variations of whole life products but lacks the clear definition and structure provided in Single Premium Whole Life. Term Life Insurance is fundamentally different, as it covers the insured for a specific period and does not accumulate cash value or endow at any age. Hence, the characteristics of Single Premium Whole Life align perfectly with the requirements specified in the question.