Certified Financial Consultant (CFC) Practice Exam

Which type of life insurance policy is referred to as a "second-to-die" policy?

1. Term life insurance.

2. Whole life insurance.

3. Juvenile life insurance.

4. Universal life insurance.

The correct answer is: Juvenile life insurance.

The correct interpretation of a "second-to-die" policy refers specifically to a type of life insurance commonly known as survivorship life insurance. This type of policy insures two individuals, typically spouses, and pays out the death benefit only after the second insured passes away. This feature makes the policy particularly beneficial for purposes such as estate planning or ensuring that heirs receive a substantial benefit after both parents have passed. Given the nature of the question, a juvenile life insurance policy primarily caters to insuring minors. It serves a different purpose, focusing on providing a death benefit for a child while also acting as a way to start a savings or cash accumulation strategy for future financial help. As such, it does not fit the characteristics of a "second-to-die" policy. In contrast, term life insurance provides coverage for a specific period without accumulating cash value; whole life insurance offers lifelong coverage with a cash value component; and universal life insurance features flexible premiums and death benefits but is not specifically designed to cover two individuals in the context of a second-to-die arrangement. Hence, none of these types align with the definition of a survivorship or "second-to-die" policy.