Question

Which statement concerning a decreasing term life policy is accurate?

A. Cash value decreases over the policy period
B. Premium decreases over the policy period
C. - Face amount decreases over the policy period
D Face amount stays the same over the policy period

Answer 1

In a decreasing term life policy, the face amount decreases over the policy period. The premium stays the same over the policy period. A decreasing term life policy is different from a cash-value (whole) life insurance policy.

Step-by-step explanation:

In a decreasing term life policy, the face amount decreases over the policy period. This means that the amount of coverage provided by the policy decreases as time goes on. For example, if you have a decreasing term life policy with a face amount of $100,000, the coverage may decrease by $10,000 each year until it reaches $0.

On the other hand, the premium for a decreasing term life policy typically stays the same over the policy period. This means that the cost to maintain the policy remains constant throughout the term, even as the coverage decreases.

It's important to note that a decreasing term life policy is different from a cash-value (whole) life insurance. In a cash-value policy, the coverage amount stays the same or even increases over time, and it also has a cash value component that can be used by the policyholder.