Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A whole life policy whose premiums and cash values are based on the insurer's current (nonguaranteed) interest, mortality, and expense assumptions, and may be adjusted periodically, is known as:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Current assumption (interest-sensitive) whole life is a permanent policy whose pricing reflects current interest rates, mortality, and expenses rather than long-term guaranteed assumptions. Premiums and cash values can be adjusted as those assumptions change, although the policy generally carries minimum guarantees. It bridges traditional whole life and universal life by adding current-experience sensitivity while keeping a level premium structure.
Why the other options are wrong
- B) Level term provides temporary coverage with no cash value and no current-assumption cash-value adjustments.
- C) Graded premium whole life changes the premium by a set schedule in the early years, not by current experience.
- D) Endowment insurance pays a stated amount at the end of the endowment period or at earlier death, a different structure.
Memory hook
Current assumption whole life = whole life priced on today's numbers, not yesterday's guesses. Current rates, adjusted later.