Question

All of the following are true regarding a decreasing term policy EXCEPT
A. The payable premium amount steadily declines throughout the duration of the contract.
B. The death benefit is $0 at the end of the policy term.
C. The contract pays only in the event of death during the term and there is no cash value.
D. The face amount steadily declines throughout the duration of the contract.

Answer 1

The statement "The payable premium amount steadily declines throughout the duration of the contract" is not true in the context of decreasing term policy.

To know that which statement is not true, we will the facts associated with 'Decreasing Term Policy';

• The insurance amount keeps reducing with the policy's life at a rate which is previously decided at the time of insurance.
• The amount paid in premium remains stable across the duration of the insurance.
• Such a policy pays a non-consolidated amount if the insurer dies prior to the maturity of the agreed term.

Thus, this shows that option A asserts a false claim regarding 'Decreasing Term Policy.'

Learn more about 'Decreasing Term Policy' here:

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