Life Insurance Policies
Why does level term cost less than whole life for the same face amount at the same age?
Answer and explanation
Answer: B. Whole life charges a level premium designed to fund the certainty of a claim, building a reserve, while term prices only the risk of death within the term, which is far from certain. Underwriting, causes of death and payment mode are not the reason.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, level term cost
More life insurance policies questions
- 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?
- An employee leaving a job asks whether to convert the group cover or buy an individual policy. What should be considered first?
- An employee's group cover ends and the employee dies eighteen days later, having applied for no individual policy. What does section 3220 provide?
- An individual purchases a life insurance policy that provides coverage for exactly one year. At the end of the year, the policyowner can renew the coverage without proving insurability, but the premium will increase based on their attained age. What type of policy is this?
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