[amp_mcq option1=”Death benefit amount decreases with term of coverage” option2=”Premium amount decreases with term of coverage” option3=”Premium remains leveled throughout the term” option4=”Mortgage redemption plans are an example of decreasing term assurance plans” correct=”option2″]
The correct answer is: B. Premium amount decreases with term of coverage
Decreasing term assurance is a type of life insurance policy that provides a death benefit that decreases over time. The premium amount for a decreasing term assurance policy remains level throughout the term of the policy.
Mortgage redemption plans are an example of decreasing term assurance plans. In a mortgage redemption plan, the death benefit is used to repay the outstanding balance on a mortgage if the insured person dies during the term of the policy.
Here is a brief explanation of each option:
- Option A: Death benefit amount decreases with term of coverage. This is correct. The death benefit amount for a decreasing term assurance policy decreases over time.
- Option B: Premium amount decreases with term of coverage. This is incorrect. The premium amount for a decreasing term assurance policy remains level throughout the term of the policy.
- Option C: Premium remains leveled throughout the term. This is correct. The premium amount for a decreasing term assurance policy remains level throughout the term of the policy.
- Option D: Mortgage redemption plans are an example of decreasing term assurance plans. This is correct. In a mortgage redemption plan, the death benefit is used to repay the outstanding balance on a mortgage if the insured person dies during the term of the policy.