A jumping juvenile life insurance policy is designed so that:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A jumping juvenile policy is whole life purchased on a child that jumps to a higher face amount, commonly several times the original amount, when the child reaches a specified age such as 21. The premium stays level and no evidence of insurability is required because the insurer priced the anticipated increase into the level premium from the start. This locks in insurability and low issue-age rates while the child is young, giving the child affordable permanent coverage as an adult. The name reflects the death benefit jumping upward at the specified age, providing a larger estate just when the young adult begins to need protection.
Why the other options are wrong
- B) The premium is level; it is the face amount that jumps at the specified age, which is the policy's defining and memorable feature. The insurer prices the future increase into the level premium from the start.
- C) The policy does not become paid up at majority; it remains a premium-paying whole life contract with the jump in coverage occurring at the stated age. The jump and the paid-up status are separate ideas.
- D) The death benefit increases rather than decreases; decreasing coverage over time is a feature of decreasing term insurance, not a juvenile product. The juvenile product is designed to grow with the child.
Memory hook
Jumping juvenile: the death benefit leaps at 21 while the premium stays put.