South Carolina Life Insurance Practice Exam

Which statement is not true regarding a Straight Life policy?

1. It provides benefits for a specified term

2. It offers lifelong coverage

3. It typically has lower premiums compared to term insurance

4. It pays benefits upon the insured's death

The correct answer is: It provides benefits for a specified term

A Straight Life policy, commonly known as a Whole Life insurance policy, is designed to provide lifelong coverage to the insured, which means it does not just cover a specified term but remains in force as long as the premiums are paid. This characteristic distinguishes it from term insurance, which only covers the insured for a limited period. The benefits associated with a Straight Life policy include a guaranteed death benefit paid to beneficiaries upon the insured's passing and potentially accumulating a cash value over time. While the premiums for a Straight Life policy might be higher on average compared to term insurance, they remain level and do not increase as the insured ages, which adds to its long-term stability. This understanding clarifies why stating that a Straight Life policy provides benefits for a specified term is not true, as its fundamental purpose is to provide lifelong financial protection rather than being limited to a specific duration.