Which of the following features about a permanent insurance policy is TRUE?

Anita is a 50-year-old woman who is thinking of purchasing a $150,000 permanent life insurance policy to pay for the capital gains tax that will be payable on her country home upon her death. She had purchased the home twelve years ago and wants to bequeath the property to her niece when she dies.

Which of the following features about a permanent insurance policy is TRUE?
A . The coverage ends when Anita turns 100.
B . The premiums will remain level for the duration of the contract.
C . The policy cannot be cancelled by Anita.
D . Anita must contact the insurer if there is a change in the insurability.

View Answer

Answer: B

Explanation:

Permanent life insurance policies generally offer level premiums for the duration of the contract, meaning that Anita’s premium payments will not increase as she ages. While coverage can be structured to extend beyond age 100, many permanent policies maintain level premiums for the policyholder’s lifetime. Unlike term insurance, Anita can also cancel the policy at any time. However, insurability changes do not typically affect existing permanent policies, which don’t require updates to health information once the policy is in force. Therefore, Option B is correct.