Question

Under INCREASING DEATH BENEFIT OPTION, what does the death benefit include?

1) The principal sum
2) The accumulated cash value
3) Both the principal sum and the accumulated cash value
4) None of the above

Answer 1

Under the Increasing Death Benefit Option of a cash-value life insurance policy, the death benefit includes both the principal sum and the accumulated cash value, providing beneficiaries with the base insurance amount plus the savings component.

Step-by-step explanation:

Under the Increasing Death Benefit Option in a cash-value (whole) life insurance policy, the death benefit includes both the principal sum and the accumulated cash value. This means that when the insured person passes away, the beneficiaries receive not only the base amount of insurance purchased, which is the principal sum, but also the additional amount which is the cash value that has accumulated over time. The cash value component can often be accessed by the policyholder before death, serving as a financial account that can be used for various needs or to borrow against.