Types of Policies
As an ordinary whole life policy matures over time and cash values increase, what happens to the insurer's net amount at risk?
Answer and explanation
Answer: C. Net amount at risk is calculated as (Face Amount - Cash Value). As cash value grows, the insurer's net amount at risk decreases.Source: Pearson VUE Texas Life Outline / Standard Insurance Principles — PDF page 4, Net Amount at Risk
More types of policies questions
- A 20-year level term policy allows conversion only during the first 10 policy years and renewal only until age 65. In policy year 9 the insured wants permanent coverage without risking later evidence-of-insurability problems. Which advice best protects the contractual right?
- A 20-year term policy allows conversion only during its first 12 years. What happens to the conversion privilege after year 12?
- A 20-year term policy permits conversion only during its first 12 years. Which statement correctly describes the feature?
- A 45-year-old buys an annuity intending to take income at 65. Which annuity classification describes the contract during those twenty years?
- A buyer wants a deferred annuity funded entirely with one lump-sum purchase payment. Which funding form should be selected?
- A buyer wants lifetime life insurance funded by one lump-sum payment and wants cash value available immediately. Which policy fits?
590 Texas questions like this one.
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