Life Insurance Policies
How do a cap and a participation rate each limit the interest credited on an indexed policy?
Answer and explanation
Answer: D. A cap truncates the credit at a stated ceiling however far the index rises, while a participation rate credits a stated percentage of the index movement. Both operate in rising periods and both may apply to the same contract along with a spread.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, indexed life cap and participation
More life insurance policies questions
- What right does the conversion privilege in a convertible term policy confer?
- What stays level throughout the term of a level term life insurance policy?
- What unbundled components characterize a universal life insurance contract?
- When does a joint life (first-to-die) policy pay its death benefit?
- When does a survivorship life (second-to-die) policy pay its death benefit?
- Which client is level premium term suited to?
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