South Carolina Life Insurance Practice Exam

Which of the following is an example of a non-cash value policy?

1. Whole Life Insurance

2. Universal Life Insurance

3. Term Life Insurance

4. Variable Life Insurance

The correct answer is: Term Life Insurance

A non-cash value policy is one that does not accumulate cash value over time, which means that it doesn't provide any savings or investment component. Term life insurance is specifically designed to provide death benefit protection for a specified term or period without building any cash value. Therefore, once the term expires, the policy can lapse if not renewed, and there are no funds that can be withdrawn or borrowed against. In contrast, whole life insurance, universal life insurance, and variable life insurance all provide a cash value component. These policies accumulate savings over time, which can be accessed by the policyholder while they are still alive. The presence of a cash value component differentiates these types of policies from term life insurance, thus establishing term life as the example of a non-cash value policy.