Colorado Life Producer License Practice Test

What characteristic makes whole life insurance permanent protection?

1. Level premiums for life

2. Coverage until death or age 100

3. Flexible payment options

4. Investment component

The correct answer is: Coverage until death or age 100

Whole life insurance is characterized as providing permanent protection primarily because it offers coverage until the insured's death or until they reach a certain age, typically age 100. This means that as long as the premiums are paid, the policy will remain in force, ensuring a death benefit is available no matter when the insured passes away within that timeframe. This aspect of whole life insurance differentiates it from term insurance, which only provides coverage for a specified period. The option regarding level premiums is also true, as whole life policies generally have premiums that do not increase over time. However, the core defining characteristic of permanence in a whole life policy is its lifetime coverage aspect. While flexible payment options and the investment component are features of some whole life policies, they do not inherently define the policy as providing permanent protection.