ECONOMICS
INSURANCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The policy only pays a death benefit
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The policy builds a cash value
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The policy provides coverage for a lifetime
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The policy is available to all consumers
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Detailed explanation-1: -It is not meant to be used as an investment instrument. Thus, it does not offer any return on the premium you pay in the fortunate event that you survive the policy tenure. However, the very absence of this investment component makes term plans so affordable.
Detailed explanation-2: -The cheapest type of life insurance is term life insurance. It is the most straightforward and affordable form of coverage. However, it is only in force for a certain period. If you want guaranteed death benefit coverage for a lifetime, whole life insurance is a better choice.
Detailed explanation-3: -Term insurance plans unlike money-back plans, do not have a fund that needs to be invested and monitored. Hence, there are no portfolio or money management related expenses. This allows insurance companies to offer term insurance plans at highly competitive premiums.
Detailed explanation-4: -Term life insurance is the cheapest type of life insurance policy; the cost of whole life insurance can be significantly higher.
Detailed explanation-5: -The premium is guaranteed not to increase for the life of the term period. The longer the term period, the higher the premium because the older, more expensive to insure years are averaged into the premium.