ECONOMICS
INSURANCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Cash value grows gradually over time
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If the policy is canceled, you may be entitled to some or all of the accrued cash value
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Policy that accumulates cash value is less expensive than a policy that does not accumulate cash value
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When an insured person dies, the beneficiary will receive the death benefit but the insurance company keeps the cash value
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Detailed explanation-1: -All of the following are characteristics of whole life insurance, EXCEPT: The cash value in a permanent life insurance policy is not a nonforfeiture benefit.
Detailed explanation-2: -Which of the following is not characteristic of a cash-value life insurance policy? The beneficiary receives the sum of the face amount and the cash value.
Detailed explanation-3: -Term life insurance It is sometimes called “pure life insurance” because, unlike whole life insurance, there’s no cash value to the policy. It’s designed solely to give your beneficiaries a payout if you die during the term.
Detailed explanation-4: -Whole life insurance guarantees payment of a death benefit to beneficiaries in exchange for level, regularly-due premium payments. The policy includes a savings portion, called the “cash value, ” alongside the death benefit. In the savings component, interest may accumulate on a tax-deferred basis.