Question

The policy-owner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

Option 1: The policy-owner cannot increase the death benefit.
Option 2: The policy-owner can increase the death benefit, but it will result in higher premiums.
Option 3: Increasing the death benefit will not affect the policy in any way.
Option 4: The policy-owner must purchase a new policy to increase the death benefit.

Answer 1

The policy-owner can increase the death benefit, but it will result in higher premiums.

Step-by-step explanation:

The correct statement regarding the policy-owner of an adjustable life policy increasing the death benefit is Option 2: The policy-owner can increase the death benefit, but it will result in higher premiums.

Increasing the death benefit will typically require the policy-owner to pay higher premiums because the insurance company will be assuming a higher risk. The death benefit is the amount that will be paid out to the beneficiary upon the death of the insured, so increasing it will result in the insurance company having to potentially pay out a larger sum of money.

However, it is important to note that the policy-owner's ability to increase the death benefit may be subject to certain limitations or conditions as outlined in the policy contract.