Questions: Shane is interested in purchasing a life insurance policy that can provide coverage for his life and also save funds at the same time. He also is concerned about fluctuating premium payments. Which of the following forms of insurance would best meet his needs? - Term life insurance - Universal life insurance - Whole life insurance - Variable life insurance

Shane is interested in purchasing a life insurance policy that can provide coverage for his life and also save funds at the same time. He also is concerned about fluctuating premium payments. Which of the following forms of insurance would best meet his needs? - Term life insurance - Universal life insurance - Whole life insurance - Variable life insurance
Transcript text: Shane is interested in purchasing a life insurance policy that can provide coverage for his life and also save funds at the same time. He also is concerned about fluctuating premium payments. Which of the following forms of insurance would best meet his needs? - Term life insurance - Universal life insurance - Whole life insurance - Variable life insurance
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Solution

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Answer

The answer is Whole life insurance.

Explanation
Option 1: Term life insurance

Term life insurance provides coverage for a specific period (e.g., 10, 20, or 30 years) and pays a death benefit if the insured dies during the term. It does not have a savings component, and the premiums are generally fixed for the term of the policy. This option does not meet Shane's need for saving funds.

Option 2: Universal life insurance

Universal life insurance offers flexible premium payments and the potential to build cash value over time. However, the cash value growth is subject to interest rates, which can fluctuate. While it does provide a savings component, the fluctuating premiums may not align with Shane's concern about premium stability.

Option 3: Whole life insurance

Whole life insurance provides lifetime coverage with fixed premium payments and includes a savings component that builds cash value over time. The cash value grows at a guaranteed rate, and the premiums remain constant throughout the life of the policy. This option meets Shane's needs for both coverage and saving funds, with the added benefit of stable premium payments.

Option 4: Variable life insurance

Variable life insurance offers a death benefit and a savings component, with the cash value invested in various sub-accounts (similar to mutual funds). The cash value and death benefit can fluctuate based on the performance of the investments, which introduces a level of risk. This option does not provide the stability Shane is looking for in terms of premium payments and cash value growth.

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