Washington Life Producer Practice Exam

Which type of life insurance policy did Reggie purchase if the face amount is $500,000 and the cash value has accumulated to $100,000 after 15 years?

1. Whole life

2. Term life

3. Universal life

4. Variable life

The correct answer is: Universal life

The correct answer is whole life insurance. In this scenario, Reggie's policy is characterized by a face amount of $500,000 and a cash value that has accumulated to $100,000 after 15 years. Whole life insurance is a type of permanent life insurance that not only provides a death benefit but also builds cash value over time. The cash value component accumulates at a guaranteed rate and can be borrowed against or withdrawn. This is a defining feature of whole life policies, as they are designed to last for the insured's lifetime, which aligns with the details provided in the question. In contrast, term life insurance solely offers a death benefit for a specified term and does not accumulate any cash value. Universal life also serves to accumulate cash value but allows for more flexibility in premium payments and death benefits, potentially making it less predictable than whole life in cash value accumulation. Variable life insurance includes investment features where the cash value can fluctuate based on the performance of selected investments, which may not guarantee a stable cash value like whole life does. Given the accumulated cash value after 15 years, it is evident that Reggie's policy is designed for cash value growth, consistent with whole life insurance principles.