PSI Life Exam Practice Test 2026 - Free Life Insurance Exam Questions and Study Guide

Whole life insurance is a type of permanent life insurance that provides coverage for the insured's entire lifetime, as long as premiums are paid. A defining characteristic of whole life insurance that sets it apart from term life insurance and other forms of insurance is the inclusion of a death benefit that is guaranteed to be paid out upon the death of the insured, regardless of when that occurs, as long as the policy is in force.

This assurance of a death benefit distinguishes whole life insurance from term insurance, which only provides coverage for a specified term or period. If the insured lives past the term, there is no payout. Additionally, other types of insurance may not be guaranteed for a lifetime or may have different structures regarding benefits. Whole life policies typically also accumulate cash value over time, which can be accessed by the policyholder during their lifetime, further solidifying their unique structure and advantages.

In contrast, the other options either misrepresent characteristics of whole life insurance or apply to different insurance types. For example, a higher risk of cancellation may be relevant to certain policies but does not specifically define whole life. Linking premiums to stock market performance is a feature of certain variable policies, not whole life. The ability to convert to term insurance applies to convertible term policies, which is