All of the Following Statements About Current Assumption Whole Life

question 50

Multiple Choice

All of the following statements about current assumption whole life insurance are true EXCEPT

• A)It is a form of participating whole life insurance that pays annual dividends.
• B)An accumulation account is credited with an interest rate based on present market conditions and company experience.
• C)Under the low-premium version,the premium is subject to change after an initial guaranteed period.
• D)Under the high-premium version,the premium may be discontinued after a period of time.

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Definitions:

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal.

Lease Payments

Regular payments made by a lessee to a lessor for the use of an asset.

Cost of Funds

The interest rate that financial institutions pay for the use of money or funds they lend out to borrowers.

Principal

Principal refers to the original sum of money borrowed in a loan or invested, exclusive of any interest or dividends.