Contracts that offer guaranteed minimum or fixed benefits are known as which type?

Contracts that offer guaranteed minimum or fixed benefits are known as which type?

• A. Variable life
• B. Fixed life insurance products
• C. Whole life
• D. Term life

Answer: (B)

The main idea here is about guarantees in a life insurance contract. When a policy promises a fixed, guaranteed benefit regardless of how markets perform or how the policy’s investments fare, that’s a fixed benefit structure. That’s exactly what fixed life insurance products provide: guaranteed benefits and often fixed premiums, with a predictable, steady value path. Variable life contracts, by contrast, tie part of the benefits to investment performance, so the death benefit and cash value can rise or fall with the market. Term life offers a death benefit for a set period but doesn’t build cash value, so it isn’t about guaranteeing fixed benefits beyond the term. Whole life is a specific example of a fixed life product that guarantees a death benefit and cash value, but the category described by guaranteed minimum or fixed benefits is fixed life insurance products.

The main idea here is about guarantees in a life insurance contract. When a policy promises a fixed, guaranteed benefit regardless of how markets perform or how the policy’s investments fare, that’s a fixed benefit structure. That’s exactly what fixed life insurance products provide: guaranteed benefits and often fixed premiums, with a predictable, steady value path.

Variable life contracts, by contrast, tie part of the benefits to investment performance, so the death benefit and cash value can rise or fall with the market. Term life offers a death benefit for a set period but doesn’t build cash value, so it isn’t about guaranteeing fixed benefits beyond the term. Whole life is a specific example of a fixed life product that guarantees a death benefit and cash value, but the category described by guaranteed minimum or fixed benefits is fixed life insurance products.