Which statement describes Interest-Sensitive (Whole Life)?

Which statement describes Interest-Sensitive (Whole Life)?

• A. Premiums remain fixed and credited interest is guaranteed
• B. Premiums adjust based on the insured’s age only
• C. The insurer can change the premiums or interest rate credited to the account based on current money market rates
• D. Cash value grows at a fixed rate with no fluctuation

Answer: (C)

Interest-Sensitive (Whole Life) means the cash value grows based on current interest rates rather than a fixed, guaranteed rate. Because market rates move, the rate credited to the cash value can change over time, and some policies allow the insurer to adjust the premium or the credited rate to reflect current money market conditions. This flexibility is what sets it apart from traditional whole life, where both the premium and the credited interest are fixed. So the best description is that the insurer can change the premiums or the interest rate credited to the account based on current money market rates. The other statements describe fixed-rate or fixed-premium features, which don’t apply to this type of policy.

Interest-Sensitive (Whole Life) means the cash value grows based on current interest rates rather than a fixed, guaranteed rate. Because market rates move, the rate credited to the cash value can change over time, and some policies allow the insurer to adjust the premium or the credited rate to reflect current money market conditions. This flexibility is what sets it apart from traditional whole life, where both the premium and the credited interest are fixed.

So the best description is that the insurer can change the premiums or the interest rate credited to the account based on current money market rates. The other statements describe fixed-rate or fixed-premium features, which don’t apply to this type of policy.