Whole life policies provide “guaranteed” cash value accounts that grow according to a formula the insurance company determines. Universal life policies accumulate cash value based on current interest rates. Variable life policies invest funds in subaccounts, which operate like mutual funds.

Which whole life policy would be paid up the quickest?

In this example, the 25-pay life policy grows cash value the fastest because the premium paying period is restricted to 25 years, whereas the 40-pay life policy premium paying period is 40 years, which grows cash value in a longer period of time.

How does the cash value of an insurance policy work?

Cash value has a minimum rate of accumulation If the gain on the index goes beyond the policy’s minimum rate of return, the cash value will mirror that of the index The premiums can be lowered or raised, based on investment performance Tied to an equity index such as the S&P 500

What kind of life policy should Q purchase?

Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase? Which statement is correct regarding the premium payment schedule for whole life policies? What type of policy would offer a 40-year old the quickest accumulation of cash value?

How to study life insurance CHP 3 flashcards?

Start studying Life Insurance chp 3. Learn vocabulary, terms, and more with flashcards, games, and other study tools. HomeBrowse Create Search Log inSign up Upgrade to remove ads Only $2.99/month Life Insurance chp 3 STUDY Flashcards Learn Write Spell Test PLAY Match Gravity Created by kevindpv952 Terms in this set (23)

When does the cash value equals the death benefit?

A Whole Life Insurance Policy endows when the Cash value equals the death benefit When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply? Extended term option Conversion provision 1035 Exchange Incontestable period Conversion provision