South Carolina Life and Health Practice Exam

Whole life insurance is a type of insurance that combines both investment and insurance features. This type of policy provides a death benefit to the beneficiaries while also accumulating cash value over time. The premiums paid into a whole life policy contribute not only to the coverage amount but also to the cash value component, which grows at a guaranteed rate, allowing policyholders to access this value through loans or withdrawals if needed. This dual functionality of providing life insurance protection and a savings or investment element differentiates it from term life insurance, which purely offers death benefit coverage without any cash accumulation, and health insurance, which is designed specifically to cover medical expenses and does not provide any investment component. Annuity contracts, while they can also serve as investment vehicles, are primarily designed to provide regular income, particularly during retirement, rather than combining insurance and investment in the same way as whole life policies.