Question

All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT Option 1: It provides coverage for the entire lifetime of the insured. Option 2: Premiums are typically higher compared to other types of life insurance. Option 3: It includes a cash value component that can be borrowed against. Option 4: The policyholder can choose to invest in the stock market.

Answer 1

Option 4: The policyholder can choose to invest in the stock market.

This statement is not true regarding an Ordinary (Straight) Life policy. Ordinary life insurance policies, also known as whole life insurance, typically do not allow policyholders to directly invest in the stock market. Instead, they have a cash value component that is managed by the insurance company, and the policyholder does not have direct control over investment decisions. The cash value component is invested by the insurance company in a way that aims to provide steady and conservative growth. Policyholders may be able to choose from a limited selection of investment options offered by the insurer, but they do not have the same level of investment freedom as they would with other types of investment accounts.