67. A decreasing term policy is issued with a decreasing death benefit and
Answer: C
A decreasing term policy is issued with a decreasing death benefit and level premiums.
A decreasing term policy features a death benefit that declines over time while maintaining level premiums throughout the policy's duration. This structure allows policyholders to have a consistent premium payment, despite the decreasing coverage amount.
A) flexible premiums.
Flexible premiums are characteristic of permanent life insurance policies, allowing policyholders to adjust the premium payments. In the context of a decreasing term policy, this option is incorrect as the policy typically has fixed premiums rather than flexible ones.
B) decreasing premiums.
While the death benefit decreases in a decreasing term policy, the premiums do not decrease; they remain level. Therefore, this option is incorrect because it misrepresents the nature of premium payments associated with decreasing term policies.
C) level premiums.
This option is correct as a decreasing term policy is designed to maintain consistent premium payments even as the death benefit decreases. This feature simplifies budgeting for policyholders, making it a typical characteristic of such policies.
D) increasing premiums.
Increasing premiums would imply that the cost of the policy rises over time, which is not the case with a decreasing term policy. Instead, the premiums remain unchanged, making this option incorrect.
Conclusion
The correct option, level premiums, accurately describes the payment structure of a decreasing term policy, where the death benefit declines while the premium remains constant. Other options fail to represent the characteristics of this type of insurance, emphasizing the importance of understanding policy structures in life insurance.