Final answer:
A valued policy is one that specifies the coverage amount. It's not the same as a market value policy, and it's not the only type of policy that can build cash value, as this concept often applies to cash-value life insurance policies. The cost comparison between valued and replacement value policies depends on various factors.
Step-by-step explanation:
Among the options provided regarding a "valued" policy, the statement that is TRUE is: A valued policy specifies the coverage amount of the policy. A valued policy is one where the insurance company agrees to pay a set amount in the event of a loss, regardless of the actual value of the loss at that time. This is in contrast to policies that pay out based on the actual cash value or replacement cost at the time of the loss.
It's important to clarify some misconceptions: A market value policy, also known as an actual cash value policy, is not a type of valued policy because it pays out based on the current market value at the time of loss. Also, the notion that a valued policy is the only type that builds a cash value is incorrect; this concept typically applies to cash-value life insurance policies, like whole life insurance, that build up a cash value over time and may provide a death benefit to beneficiaries. Finally, the cost of a valued policy compared to a replacement value policy can vary depending on other factors and is not necessarily more expensive because it has a specific amount set for coverage.