PSI Ohio Insurance Practice Exam

Which of the following is NOT a characteristic of variable whole life insurance?

1. Guaranteed minimum death benefit

2. Flexible premium payments

3. Investment component

4. Cash value accumulation tied to investment performance

The correct answer is: Guaranteed minimum death benefit

Variable whole life insurance is a type of permanent life insurance that provides both a death benefit and a cash value component, where the cash value growth is tied to the performance of underlying investments. The guaranteed minimum death benefit is characteristic of traditional whole life insurance but is not a defining feature of variable whole life insurance. In variable whole life policies, while there is typically a death benefit, it is not guaranteed to remain at a fixed level; it can fluctuate based on the performance of the investment options chosen by the policyholder. The other characteristics mentioned are fundamental to variable whole life insurance. Flexible premium payments allow policyholders to adjust their contributions within certain limits. An investment component is central to this type of policy, as it enables the cash value to grow based on the performance of selected investments. Lastly, cash value accumulation tied to investment performance is intrinsic to variable whole life insurance, distinguishing it from other life insurance products where cash value growth is generally guaranteed or fixed. Hence, the guaranteed minimum death benefit is not a characteristic of variable whole life insurance, making it the correct choice for this question.