Question

Which of the following statements about term life insurance is correct?​

	a.	​Investors who prefer to receive current income can invest in income policies, and investors who are willing to accept higher risks in hopes of obtaining higher returns can invest in growth funds.
	b.	​The premiums associated with a term insurance policy are fixed payments computed as an average of the premiums required over the expected life of the insured person.
	c.	​It is a relatively short-term contract that provides financial protection for a temporary period.
	d.	​It offers both insurance coverage and a savings feature.
	e.	It is administered primarily by the trust departments of commercial banks.​

Answer 1

CORRECT statement     C

Statement C is correct about term life insurance.

a) This statement is about the mutual funds, not about insurance policy

b) This statement is about Whole Life Policy. In the case of term life insurance, the premium increases with each renewal as age increases there is risk for premature death. Thus this statement is incorrect.

c) This is the CORRECT statement about term life insurance. It is short-term contract and provides financial protection for a temporary period only.

d) Both insurance coverage and a savings feature is offered by Whole Life Policy, not term life insurance. Thus this statement is incorrect.

e) Pension funds are administered primarily by the trust departments of commercial banks not term life insurance. Thus this statement is incorrect