Question

What is the purpose of the reserve element (cash value) in whole life insurance?

a.

To increase the premium rate.

b.

To pay for the policy in the earlier years.

c.

To level out the increasing cost of insurance in the older stage of life.

d.

To provide a return of savings element.

Posted under IC 89 Management Accounting

Answer: (c).To level out the increasing cost of insurance in the older stage of life. Explanation:The reserve element (cash value) in whole life insurance helps level out the increasing cost of insurance in the older stage of life.

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Q. What is the purpose of the reserve element (cash value) in whole life insurance?
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