Life Insurance Basics
What gives a permanent policy its cash accumulation feature?
Answer and explanation
Answer: B. Charging a level premium means overpaying in the early years relative to mortality cost, and that excess with interest becomes the cash value. Rising premiums characterise term insurance, dividends are not guaranteed, and separate accounts belong to variable products.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, cash accumulation
More life insurance basics questions
- Who owns, pays for, and benefits from key person life insurance?
- Whose interests may a producer weigh when making a recommendation under Regulation 187?
- Why can the human life value approach and the needs approach produce different amounts for the same client?
- Why does paying premium monthly usually cost more in total than paying annually?
- Why does paying premiums monthly cost more over a year than paying annually?
- Why is a copy of the application attached to the life insurance policy when it is issued?
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