Question

1. Which of the following is (are) among the probable disadvantages of replacing one life insurance policy   with another?

           

             I          A new contestable period will be applicable.

            II          Acquisition costs will have to be paid again.

            (A)       I only               (C)       Both I and II

            (B)       II only              (D)       Neither I nor II

Answer 1

Answer is B) II only .

Reason being when we replace a life insurance policy the cost of acquiring a new policy like commission of the agent, processing charges are to be paid in each installment ( The insurance company design the premium in thag way) . That's the loss . Apart other loss is of features that the last insurance may be having but the new might not have. In same cost due to inflation.

A new contestestable period can be a benifit that last insurance may be covering lesser age that the new one .