32. A whole life insurance policy issued by a mutual insurer that provides a return of divisible surplus is called a
Answer: D
A participating whole life insurance policy provides a return of divisible surplus.
A participating whole life insurance policy issued by a mutual insurer is designed to return dividends to policyholders, which is the divisible surplus generated by the insurer's operations.
A) straight whole life insurance policy.
A straight whole life insurance policy is a type of whole life insurance that provides coverage for the insured's entire life. However, it does not necessarily include the provision of dividends or a return of divisible surplus, making it incorrect in the context of the question.
B) continuous premium whole life insurance policy.
A continuous premium whole life insurance policy requires premiums to be paid throughout the insured's lifetime. While it ensures lifelong coverage, it does not specifically relate to the return of divisible surplus, which is a defining feature of participating policies.
C) limited pay whole life insurance policy.
A limited pay whole life insurance policy allows the policyholder to pay premiums for a limited time while still enjoying lifelong coverage. Similar to the previous options, it does not inherently provide dividends or a return of divisible surplus, thus making it incorrect.
D) participating whole life insurance policy.
A participating whole life insurance policy is specifically designed to return dividends to policyholders, reflecting the divisible surplus generated by the mutual insurer. This feature aligns directly with the question, making this option the correct choice.
Conclusion
The participating whole life insurance policy is definitively the correct answer as it explicitly provides a return of divisible surplus to policyholders. In contrast, the other options—straight whole life, continuous premium, and limited pay policies—lack this critical feature, which is central to the definition of a participating policy.