Types of Life Insurance Policies

Correct

The answer is C: A participating policy

A participating policy allows the policy owner to receive dividends, which reflect the insurer's favorable experience. Non-participating policies do not pay dividends. Universal life policies focus on interest crediting and flexible premiums, while variable life policies involve investment in separate accounts and do not typically pay traditional dividends but rather reflect investment performance.

Reviewed in our October 2026 California fact-check.

Correct

The answer is D: They typically have no cash or surrender value.

Term life insurance is pure protection for a specific period and does not accumulate cash value or have a surrender value. It does not provide coverage for an entire life, only for the specified term. While some term policies have guaranteed level premiums for the term, premiums usually rise upon renewal due to increased age, and not all term policies have level premiums (e.g., annual renewable term).

Reviewed in our October 2026 California fact-check.

Correct

The answer is A: Whole Life

Whole life insurance is characterized by a guaranteed death benefit, premiums that remain level for the entire life of the policy, and a cash value component that grows on a guaranteed basis and can be borrowed against. Term life has no cash value. Universal life offers flexible premiums and adjustable death benefits, and its cash value growth is interest-sensitive rather than fully guaranteed. Variable life invests the cash value in separate accounts, so the cash value is not guaranteed and rises or falls with investment performance (the death benefit typically has a guaranteed minimum).

Reviewed in our October 2026 California fact-check.