Question

When an accidental death benefit is added to a whole life policy, how does this affect the policy's cash value?

A) Increases the policy's cash value
B) Decreases the policy's cash value
C) Policy's cash value is not affected
D) Policy loans will no longer be available

Answer 1

Adding an accidental death benefit to a whole life policy does not affect the policy's cash value. The cash value continues to accumulate separately from the additional coverage provided by the rider.

Step-by-step explanation:

When an accidental death benefit is added to a whole life policy, the policy's cash value is not affected. The cash value of the whole life policy continues to grow over time, independent of any additional riders or benefits that might be added. The accidental death benefit is a type of rider that provides additional coverage in case the insured dies due to an accident.