Final answer:
Interest credited to a whole life policy's cash value increases that value and can reduce the period of paying premiums, making statement B the true one for an interest sensitive whole life policy.
Step-by-step explanation:
Regarding an interest sensitive whole life policy, the correct statement is that interest credited increases cash value and shortens the premium payment period. Whole life insurance policies typically have a guaranteed death benefit and a cash value component. The cash value acts somewhat like a savings account and accumulates over time. When interest is credited to this cash value, it naturally increases. As the cash value increases, it can sometimes be used to pay the premiums on the policy itself, which can effectively shorten the period during which out-of-pocket premium payments are required. Therefore, the statement B. Interest credited increases cash value and shortens the premium payment period, is the correct answer.