Insurance Awareness - Life Insurance - LIC
Which of the following is a benefit of the cash value component in Whole Life Insurance?
Which of the following is a benefit of the cash value component in Whole Life Insurance?
easy Q13 of 15
Step-by-Step Solution
Step 1: Understand cash value in Whole Life Insurance
The cash value is a savings component that accumulates over time and provides financial flexibility to the policyholder.Step 2: Evaluate the options
Option A is incorrect because cash value does not reduce the sum assured. Option B is incorrect as cash value does not increase premiums. Option D is incorrect because on surrender, the policyholder actually receives the cash value (subject to charges). Option C correctly states that the accumulated cash value can be borrowed against or withdrawn.Final Answer:
It can be borrowed against or withdrawn by the policyholder → Option CQuick Check:
Cash value acts as a savings reserve accessible through loans or withdrawals, confirming Option C.
Quick Trick: Cash value = Savings that can be borrowed or withdrawn.
Common Mistakes:
MISTAKES- Assuming cash value reduces death benefit or increases premiums.
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