Question

Which statement is NOT true regarding a straight life policy?

1. its premium steadily decreases over time, in response to its growing cash value
2. the face value of the policy is paid to the insured at age 100
3. it usually develops cash value by the end of the third policy year
4. it has the lowest annual premium of the three types of whole life products

Answer 1

Statement 1 is NOT true regarding a straight life policy, as its premium does not steadily decrease over time.

Step-by-step explanation:

The answer is: 1. its premium steadily decreases over time, in response to its growing cash value.

The other three statements are true regarding a straight life policy. The face value of the policy is typically paid to the insured at age 100, it usually develops cash value by the end of the third policy year, and it generally has the lowest annual premium compared to other types of whole life products.

In a straight life policy, the premium remains constant throughout the policyholder's life, while the cash value steadily grows over time. This allows the policy to accumulate cash value, which can be accessed by the policyholder through loans or withdrawals.