The correct answer is: C. Longer the policy term, larger the investment element.
An endowment policy is a type of life insurance policy that combines life insurance with an investment component. The investment component is designed to grow over time and provide a lump sum of money at the end of the policy term, or upon death, whichever comes first. The amount of the investment element will depend on a number of factors, including the length of the policy term, the amount of the premium, and the investment performance of the policy.
In general, the longer the policy term, the larger the investment element will be. This is because the investment has more time to grow. However, it is important to note that there is no guarantee that the investment will grow at all, and there is always the risk that it could lose value.
It is important to choose an endowment policy that is right for your individual needs and circumstances. If you are looking for a policy that will provide you with a lump sum of money at the end of the policy term, then a longer policy term may be a good option. However, if you are looking for a policy that will provide you with death benefits, then a shorter policy term may be a better option.
Here is a brief explanation of each option:
- Option A: Shorter the policy term, lesser the investment element. This is not always the case. The amount of the investment element will depend on a number of factors, including the length of the policy term, the amount of the premium, and the investment performance of the policy.
- Option B: Shorter the policy term, larger the investment element. This is also not always the case. The amount of the investment element will depend on a number of factors, including the length of the policy term, the amount of the premium, and the investment performance of the policy.
- Option C: Longer the policy term, larger the investment element. This is generally the case. The longer the policy term, the more time the investment has to grow. However, it is important to note that there is no guarantee that the investment will grow at all, and there is always the risk that it could lose value.
- Option D: Term and investment element do not bear any relationship. This is not true. The length of the policy term will have an impact on the amount of the investment element.