New York Insurance Exam Practice Question
Which type of life insurance policy builds cash value?
Correct Answer: B
Rationale: Whole life insurance is designed to provide lifelong coverage while also accumulating cash value over time through its investment component. This cash value can be borrowed against or withdrawn, making it a unique feature of this policy type.
Term life insurance (A) offers coverage for a specific period without any cash value accumulation. Group life insurance (C) typically provides coverage for a group, such as employees, but does not build cash value. Accidental death insurance (D) pays benefits only in the event of accidental death and also lacks any cash value component. Each of these options serves different purposes, but only whole life insurance combines coverage with cash value growth.
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