78. Which of the following is NOT ordinary life insurance?
Answer: B
A 20-year endowment life policy is NOT ordinary life insurance.
A 20-year endowment life policy is a specific type of insurance that combines features of both life insurance and savings. Unlike ordinary life insurance, which typically provides coverage for the lifetime of the insured, an endowment policy pays out a sum either upon the death of the insured within the term or at the end of the specified term if the insured survives.
A) A group term life insurance policy.
A group term life insurance policy is considered ordinary life insurance as it provides coverage for a group of individuals, typically through an employer or organization, for a specified term. It usually does not build cash value and is designed to offer pure life insurance protection during the coverage period.
B) A 20-year endowment life policy.
The 20-year endowment life policy is not categorized as ordinary life insurance because it serves a dual purpose: it provides both life insurance coverage and a savings component that matures after 20 years. This characteristic differentiates it from standard life insurance policies that focus solely on providing death benefits.
C) A life paid-up-at-age-85 policy.
A life paid-up-at-age-85 policy is an example of ordinary life insurance. It provides coverage for the lifetime of the insured, with the premiums fully paid by the age of 85. This type of policy ensures that the insured has lifetime coverage without further premium payments after reaching the specified age.
D) A participating whole life policy.
A participating whole life policy is a form of ordinary life insurance that not only provides lifetime coverage but also allows policyholders to receive dividends based on the insurer's financial performance. This type of policy builds cash value over time, which aligns with the fundamental characteristics of ordinary life insurance.
Conclusion
The distinction of the 20-year endowment life policy as the correct answer lies in its unique combination of life insurance and savings features, setting it apart from ordinary life insurance options that focus solely on providing death benefits. All other options listed represent forms of ordinary life insurance, emphasizing the core concept of providing lifetime coverage or term protection without additional savings components.