Question

Term life insurance is a form of insurance that is typically less expensive initially than whole life insurance and provides pure or temporary protection for a limited period of time. Which of the following statements is not true?

Answer 1

Term life insurance is initially less expensive than whole life insurance because it lacks a cash value component. Whole life insurance provides a death benefit along with a savings feature, which can make it costlier. Insurance products are designed to prevent significant financial loss from unforeseen events.

Step-by-step explanation:

The question pertains to term life insurance, which is less expensive initially compared to whole life insurance because it offers temporary protection without an accumulated cash value.

Whole life insurance, on the other hand, combines a death benefit with a cash value component that grows over time, and this cash can be borrowed against or used as collateral. Unlike term life insurance, whole life insurance premiums are generally higher due to this investment-like savings feature. Insurance markets include a variety of products like health insurance, car insurance, and house insurance, all designed to provide financial protection against specific risks. Insurance companies gather premiums to create a pool of money from which claims are paid out, mitigating the financial impact of adverse events on individuals.