Of the Following, Which One Is the Most Positive Feature

question 64

Multiple Choice

Of the following, which one is the most positive feature of whole life insurance for a person who wants a more structured way to save?

• A) You must pay interest on any loans.
• B) You pay premiums each year for the rest of your life.
• C) It is more expensive than term insurance.
• D) It builds cash value.
• E) It is permanent life insurance.

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Definitions:

Interest-Rate Risk

Interest-Rate Risk refers to the risk of investment value changing due to fluctuations in the absolute level of interest rates, which can negatively affect fixed-income securities.

Price Risk

The risk that the price of an asset will change negatively, impacting the investment's value and potentially leading to financial loss.

Reinvestment Risk

The risk that future cash flows (like interest or dividends) will need to be reinvested at a lower return than the original investment.

Coupon Bond

A type of bond that pays the holder a fixed interest payment (coupon) at regular intervals until the bond reaches its maturity date.