Florida 2-14 Life Insurance License (214 License) Practice Exam

A whole life policy is designed to provide lifelong coverage with a guaranteed death benefit, which means it pays a specified amount to the beneficiary upon the death of the insured, regardless of when that occurs. In addition to this level face amount, whole life policies accumulate cash value over time. This cash value grows at a guaranteed rate and can be accessed by the policyholder through loans or withdrawals, providing a savings component that adds to the policy’s overall value.

The characteristics of the cash value feature and the level face amount are distinctive to whole life policies, making them different from other types of life insurance. For example, term life policies do not accumulate cash value and only provide coverage for a specified term, while endowment policies feature a payout at a specific age or date, also differing from the continuous coverage of whole life policies. Variable life policies allow for cash values to fluctuate based on investment performance, which contrasts with the fixed nature of the cash value in whole life policies.