Difficulty: Hard

Average Score: 36%

Which of the following is NOT ordinary life insurance?

Rationale

A group term life insurance policy.

Group term life insurance is typically provided by employers or organizations to a group of individuals, offering coverage to all members without requiring individual underwriting. This type of insurance is distinct from ordinary life insurance, which is usually purchased individually and can build cash value over time.

A (A group term life insurance policy.) CORRECT

Group term life insurance is generally offered as a part of employee benefits and covers multiple people under one contract. It lacks the individualized components and cash value accumulation associated with ordinary life insurance policies, making it fundamentally different in structure and purpose.

B (A 20-year endowment life policy.) YOUR ANSWER

A 20-year endowment life policy is a type of ordinary life insurance that pays a benefit upon the insured's death or at the end of the 20-year term, whichever comes first. This policy can accumulate cash value and is designed for individuals seeking both life coverage and a savings component.

C (A life paid-up-at-age-65 policy.) YOUR ANSWER

This policy is a form of ordinary life insurance that becomes fully paid up by the age of 65, providing lifelong coverage without further premium payments. It builds cash value over time, aligning with the characteristics of standard life insurance products.

D (A participating whole life policy.) YOUR ANSWER

A participating whole life policy is a traditional form of ordinary life insurance that allows policyholders to receive dividends based on the insurer's performance. It provides lifelong coverage and accumulates cash value, fitting the definition of ordinary life insurance.

Conclusion

Ordinary life insurance encompasses policies purchased individually that typically offer cash value and long-term coverage. Among the options presented, a group term life insurance policy stands out as it does not conform to these characteristics, instead serving as a collective benefit without individual cash value. Thus, it is the only choice that does not represent ordinary life insurance.

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