New York State Life Insurance Exam Questions Practice Question
The difference between the face value of a life insurance policy and its cash value is the
Correct Answer: C
Rationale: The difference between the face value of a life insurance policy and its cash value is known as the net amount. This represents the actual benefit paid out upon the policyholder's death, minus any cash value that has been accessed or withdrawn.
Option A, market value, refers to the price at which an asset would trade in a competitive auction setting, which is not applicable here. Option B, assumed amount, lacks relevance in the context of insurance terminology. Option D, term value, pertains specifically to term life insurance, which does not encapsulate the difference between face and cash values. Thus, net amount accurately describes this difference.
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