New York State Life Insurance Exam Questions Practice Question
Which is an accurate description of the relationship between the premiums of a whole life policy and the premium payment period?
Correct Answer: C
Rationale: In whole life insurance, the premium payment period directly impacts the annual premium amount. A shorter payment period requires the insurer to collect the total premium in a limited time, resulting in higher annual premiums to ensure the policy is fully funded sooner.
Option A is incorrect; the payment period is indeed related to the annual premium. Option B misrepresents the relationship; a shorter payment period does not lead to lower premiums. Option D is also incorrect; a longer payment period spreads the cost over more years, typically resulting in lower annual premiums.
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