PSI Life Exam Practice Test

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Prepare for the PSI Life Exam with our comprehensive flashcards and multiple choice questions. Each question offers hints and detailed explanations to enhance your understanding and readiness. Ace your exam with confidence!

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What is one of the main benefits of a whole life insurance policy?

It has a lower premium than term insurance
It accumulates cash value over time
It is automatically renewable
It does not require medical underwriting

The correct answer is: It accumulates cash value over time

One of the main benefits of a whole life insurance policy is that it accumulates cash value over time. This cash value component allows policyholders to build savings within their policy, which can be accessed through loans or withdrawals. Unlike term insurance, which provides coverage for a specific period without any cash accumulation, whole life insurance offers both a death benefit and a savings component. This feature can be especially advantageous for individuals looking for a long-term financial planning tool, as the cash value grows at a guaranteed rate and can be utilized in various ways throughout the policyholder's life. Additionally, the cash value can provide a source of funds for emergencies, retirement planning, or other financial needs.