New York State Life Insurance Exam Questions Practice Question
As a form of level premium permanent insurance, ordinary life insurance accumulates a reserve that eventually
Correct Answer: A
Rationale: Ordinary life insurance is designed to build a cash value over time, which ultimately accumulates to equal the face amount of the policy at maturity or upon the insured's death.
Option B is incorrect because while some policies may pay dividends, this is not a guaranteed feature of ordinary life insurance. Option C is misleading; the cash value continues to earn interest and grow throughout the policy's duration. Option D is also incorrect, as policyholders are not required to take cash value distributions; they can choose to leave it to grow. Hence, the reserve's growth aligns with the face amount, ensuring the policy's intended benefits.
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