asked 124k views
3 votes
Because it is less expensive, term insurance has which of the following drawbacks?

a) Cash value component
b) Permanent coverage
c) Renewable premiums
d) No cash value accumulation

1 Answer

4 votes

Final answer:

Term insurance is more affordable but lacks a cash value accumulation, which is a component found in whole life insurance that can be used as an account by the policyholder.

Step-by-step explanation:

Because it is less expensive, term insurance has the drawback of no cash value accumulation. Unlike cash-value (whole) life insurance, which has a death benefit and a cash value component, term insurance is designed solely to provide a death benefit for a specified period, without any accumulation of cash value that could be used by the policyholder while alive. The primary purpose of term insurance is to offer coverage at a lower cost, for a temporary term, without additional investment features.

answered
User Vasea
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