PSI Ohio Insurance Practice Exam

Which of the following is NOT a characteristic of a Whole Life Policy?

1. Fixed premiums

2. Cash value accumulation

3. Guaranteed dividends

4. Lifetime coverage

The correct answer is: Guaranteed dividends

A Whole Life Policy is designed to provide lifelong coverage, typically with fixed premiums and cash value accumulation. The fixed premiums mean that the policyholder pays the same amount throughout the life of the policy, which makes budgeting easier. The cash value component grows over time, allowing policyholders to borrow against it or access it if they choose to surrender the policy. Lifetime coverage is another defining feature of a Whole Life Policy, ensuring that the insured is covered as long as premiums are paid, regardless of age or health changes. Guaranteed dividends, however, are not a universal characteristic of all Whole Life Policies. While some policies may offer dividends, these are contingent on the insurer's performance and are not guaranteed. Thus, selecting a Whole Life Policy does not ensure that the insured will receive dividends, making this the correct response to the question.