80.0k views
2 votes
All of the following statements concerning term life insurance are correct except: question 4 options:

a. an individual's mortality risk affects the price of the term insurance premiums.
b. term-insurance policies tend to be used by older individuals more frequently than younger individuals.
c. unlike other forms of life insurance, term insurance policies do not have cash accumulation features.
d. an annual renewable term policy (art) permits the policyholder to purchase term insurance in subsequent years without evidence of insurability.

1 Answer

3 votes

Final answer:

The incorrect statement concerning term life insurance is that it is used more frequently by older individuals than younger individuals, which is not the case as younger individuals often prefer term life due to its affordability and suitability for temporary needs.

Step-by-step explanation:

The question pertains to the characteristics of term life insurance and which of the given statements is incorrect. To start with:

  • (a) It is true that an individual's mortality risk affects the price of the term insurance premiums, as insurers assess the risk of death to determine the premium.
  • (c) Term insurance policies indeed do not have a cash accumulation feature, which is characteristic of other types of life insurance such as whole life insurance.
  • (d) An Annual Renewable Term policy (ART) allows the policyholder to renew the insurance each year without having to show evidence of insurability, meaning their coverage can continue even if their health status changes.

However, the incorrect statement among the options provided is:

(b) Term insurance policies tend to be used by older individuals more frequently than younger individuals.

This statement is not correct because term life insurance is often more common among younger individuals due to its affordability and the specific need for temporary coverage, such as until a mortgage is paid or children have grown. Older individuals might prefer other types of life insurance that offer permanent coverage and possibly a cash value.

Therefore, the correct option in the final answer is (b).

User AdvilUser
by
7.8k points