Life Insurance Policies
Does a level premium term policy accumulate cash value the owner may reach?
Answer and explanation
Answer: A. Although levelling the premium creates a reserve, term policies provide no cash surrender or loan value, so nothing is payable to the owner. The premium exceeds the mortality cost in the early years rather than falling short of it.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, level premium term and cash value
More life insurance policies questions
- A universal life owner wants to vary the timing and amount of premium payments. Which condition remains essential?
- A universal life policy’s cash value is no longer sufficient to cover current insurance costs, and the owner makes no additional payment. What is the principal policy risk?
- A variable universal life owner pays only minimal premiums while the selected separate-account options lose value. Monthly cost-of-insurance and expense deductions continue. What is the main near-term risk if the owner makes no change?
- A variable universal life policy keeps the same stated premium plan and mortality charge schedule, but the owner's selected stock subaccount falls sharply. Which policy element is directly changed first by that investment performance and can later affect whether charges can be paid?
- An annual renewable term policy keeps the same death benefit for each one-year term. What normally happens to its premium from year to year?
- An eligible employee declines the contributory plan at first, then applies to join two years later. What may the insurer require?
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