Which of the Following Is a Significant Disadvantage of a Cash-Value

question 64

Multiple Choice

Which of the following is a significant disadvantage of a cash-value policy?

• A) Provides the ability to leave a sum of money to a charity or family members on a tax-free basis.
• B) Preserves insurability.
• C) Provides estate liquidity.
• D) Costs more than term policies.

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Definitions:

Bond Indenture

A legal contract detailing the terms and conditions under which a bond is issued, including interest rates, maturity dates, and issuer obligations.

Sinking Fund

A fund set aside by a corporation for the purpose of repaying debt or buying back shares, to ensure financial stability and investor confidence.

Seniority Requirements

Rules or conditions that prioritize certain debts or obligations over others, typically in the event of bankruptcy or liquidation.

Zero-Coupon Bond

A type of bond that does not pay interest during its life but is sold at a substantial discount from its face value and pays its full face value at maturity.