Which of the following statements regarding TERM insurance is true ?
A. It provides temporary protection
B. It builds up cash value
C. It pays more than the face amount
D. It's more expensive than straight life
To determine which statement regarding TERM insurance is true, let's break down each option:
A. It provides temporary protection: This statement is true. Term insurance is designed to provide coverage for a specific period, commonly 10, 20, or 30 years. It does not provide lifelong protection like whole life insurance.
B. It builds up cash value: This statement is false. Term insurance does not accumulate any cash value over time. It is purely focused on providing a death benefit if the insured person passes away during the term of the policy.
C. It pays more than the face amount: This statement is false. The face amount, also known as the death benefit, is the amount paid to the beneficiary in the event of the insured person's death. Term insurance typically pays the face amount or a fixed multiple of it, depending on the policy.
D. It's more expensive than straight life: This statement is true. Term insurance is generally less expensive than whole or straight life insurance. This is because it only provides coverage for a specific period and does not include any investment or cash value components.
Therefore, the correct answer is A. It provides temporary protection.