New York Insurance Exam Practice Question
What is the purpose of a policy's surrender value?
Correct Answer: B
Rationale: The surrender value of a policy serves as a financial safety net, allowing the policyholder to receive cash upon termination of the policy. This value reflects the amount returned after deducting any fees or outstanding loans.
Option A, increasing premiums, does not relate to surrender value, which is a benefit rather than a cost. Option C, waiving the death benefit, misinterprets the function of surrender value, as it does not eliminate the death benefit but rather provides an alternative cash option. Option D, extending the policy term, is unrelated, as surrender value is only applicable when the policy is terminated, not extended.
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