Question

Which one of the following statements best describes a "twenty-payment" life policy (20 annual payments)?

O payment of the face amount at the end of 20 years.
O payment of the death benefit only if death occurs during the 20 year period.
O payment of premiums only during the 20 year period.
O payment of the cash value and the face amount if death occurs during the 20 year period.
O none of the above.

Answer 1

A "twenty-payment" life insurance policy involves payment of premiums for 20 years, after which no further premiums are required, while the insured is covered for life. The policy also accrues cash value.

Step-by-step explanation:

The statement that best describes a "twenty-payment" life policy is that it involves payment of premiums only during the 20 years. This type of policy is a form of whole life insurance in which the insured is covered for their entire life, but premiums are only required to be paid for the first 20 years. During that time, the policy accumulates cash value on a tax-deferred basis, which the policyholder can access through loans or withdrawals. The death benefit is paid out to the beneficiaries if the insured person dies during the 20 years of premium payment or afterward, as long as the policy is in force.