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Because it is less expensive, term insurance has which of the following drawbacks?

a) Cash value component
b) Permanent coverage
c) Renewable premiums
d) No cash value accumulation

User Kim Carlo
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1 Answer

4 votes

Final answer:

Term insurance is more affordable but lacks a cash value accumulation, which is a component found in whole life insurance that can be used as an account by the policyholder.

Step-by-step explanation:

Because it is less expensive, term insurance has the drawback of no cash value accumulation. Unlike cash-value (whole) life insurance, which has a death benefit and a cash value component, term insurance is designed solely to provide a death benefit for a specified period, without any accumulation of cash value that could be used by the policyholder while alive. The primary purpose of term insurance is to offer coverage at a lower cost, for a temporary term, without additional investment features.

User Vasea
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