Types of Policies
What happens to the cash value in a decreasing term life policy as the face amount approaches zero?
Answer and explanation
Answer: A. Term insurance contracts do not accumulate cash values.Source: NAIC Term Life Guide — PDF page 3, Cash Value in Term
More types of policies questions
- A buyer wants to fund a deferred annuity with one lump-sum purchase payment and make no later premiums. Which funding form fits?
- A client asks why return-of-premium term costs more than ordinary level term for the same face amount and period. What is the correct explanation?
- A client rejects separate-account market risk and also does not want required premiums later recalculated under a current-assumption design. The client wants whole life with required fixed premiums, but with extra credited interest, when available, improving values or helping future premiums. Which design best fits?
- A client wants flexible premiums and an adjustable death benefit, but also wants to place policy value in equity and bond portfolios and accepts that those values can rise or fall with market performance. Which explanation best distinguishes the product from non-variable universal life?
- A client wants permanent life insurance but wants all required premiums completed within 20 years. Which policy best matches that goal?
- A consumer compares traditional whole life with a current-assumption whole life contract. The insurer says premiums may later be reevaluated based on current mortality, expense, and investment experience, while minimum cash value and a nonfluctuating death benefit remain guaranteed. Which conclusion is best?
590 Texas questions like this one.
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