Final answer:
Statement I is correct because mortality costs for term life insurance rise with age. Statement II is incorrect as term insurance does not accumulate cash value; it provides a death benefit for a specified term.
Step-by-step explanation:
The student asked which statements regarding term life insurance are correct: I. The mortality cost for term insurance rises at an increasing rate due to increasing death rates with age, and II. Term insurance has a cash value.Statement I is correct; because death rates typically increase with age, the cost of term life insurance also increases. This is due to the higher risk of death, which is reflected in the mortality rate of life tables used by insurers to predict life expectancy and set premiums.
Statement II is incorrect; unlike whole life insurance, term insurance does not have a cash value component. Its primary function is to provide a death benefit during the specified term of the policy. Any premiums paid are used to secure the death benefit, not to accumulate cash valueThe correct statement about term life insurance is that term insurance does not have a cash value. Unlike permanent life insurance policies such as whole life or universal life, term insurance is a type of life insurance that provides coverage for a specified term, typically 10, 15, 20, or 30 years. It does not accumulate cash value over time.Regarding the first statement, it is incorrect. The mortality cost for term insurance does not necessarily rise at an increasing rate as ages increase. The cost is determined based on actuarial calculations that take into account various factors including the insured's age, health, and the term length.