Free Georgia Life, Accident and Sickness Agent Exam Flashcards

Ordinary whole life charges a level premium for life, which is more than the true cost of mortality when the insured is young and less than the true cost when the insured is old. The early overpayment builds the reserve and cash value that funds the later shortfall, so the insurer can guarantee both coverage for the whole of life and a premium that never rises. The guaranteed death benefit, level premium and guaranteed cash value schedule define the contract.