Which of the Following Statements Regarding Term Life Insurance Is

question 55

Multiple Choice

Which of the following statements regarding term life insurance is true?

• A) All term policies maintain a level premium throughout all periods of coverage while the amount of protection decreases.
• B) Term life usually offers lower initial premiums than other types of insurance.
• C) Term life insurance offers permanent coverage.
• D) A major disadvantage of term insurance is the lack of a convertibility provision.
• E) Term life insurance provides for the accumulation of cash value.

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Definitions:

Gift Tax

A federal tax on the transfer of property by gift from one individual to another, where the giver receives nothing or less than full value in return.

Assumed Mortgage

When a property buyer takes over the seller's existing mortgage, it is referred to as an assumed mortgage.

Recognized Gain

The portion of a gain that is subject to tax, as realized from the sale or exchange of a capital asset beyond the original purchase price.

Section 1245

A section of the U.S. Internal Revenue Code that deals with the tax treatment of depreciable property and requires the recapture of depreciation upon sale of the property as ordinary income.