California Life and Health Insurance Practice Exam

Question: 1 / 400

What advantage does cash value insurance offer compared to term insurance?

It has a lower premium than term insurance

It builds cash value over time

Cash value insurance is designed to provide both a death benefit and a savings component, which distinguishes it from term insurance. Unlike term insurance, which offers coverage for a specific period at a lower cost but does not accumulate any cash value, cash value insurance accumulates a cash value over time. This cash value can be accessed by the policyholder through loans or withdrawals and can grow on a tax-deferred basis, providing additional financial benefits.

This feature makes cash value insurance an appealing option for individuals who want both life coverage and a savings element. Policyholders can use the accumulated cash value for various purposes, such as supplemental retirement income, emergencies, or other financial needs, making it a versatile financial product.

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It has a fixed coverage limit

It is only available to younger policyholders

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