A Disability Policy with a Longer Elimination Period Typically Charges

question 59

True/False

A disability policy with a longer elimination period typically charges lower premiums than a policy with a short elimination period.

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Definitions:

Annual Coupon

The annual coupon is the interest payment that a bond issuer makes to bondholders each year, expressed as a percentage of the bond's face value.

Price

The amount of money required to purchase a good, service, or asset.

Maturity

The time at which a financial instrument becomes due for payment.

Liquidity Premium (LP)

Additional return demanded by investors for holding securities with lower liquidity, compensating for the potential cost and difficulties in trading.