Question 95

It requires only one payment to make the policy paid up

A single premium cash value policy is characterized by the requirement of only one payment to make the policy fully paid up, meaning no further premiums are necessary.

A) It requires only one payment to make the policy paid up

This statement accurately describes a single premium cash value policy, as it indicates that the policyholder needs to make only one payment to ensure the policy is fully funded and active for its duration.

B) It provides for only one premium to be paid without evidence of insurability

While this statement mentions a single premium, it incorrectly emphasizes the lack of evidence of insurability. Most policies, including single premium cash value policies, typically require some form of insurability assessment, even if only one premium is paid.

C) It waives one future premium if the owner becomes disabled

This statement describes a feature commonly found in certain policies, but it does not accurately reflect the nature of a single premium cash value policy. Such policies do not typically include provisions for waiving premiums due to disability.

D) It requires the policyowner to pay one premium annually

This option misconstrues the structure of a single premium cash value policy. A single premium policy requires one lump-sum payment rather than annual payments, making this statement incorrect.

Conclusion

The correct answer, option A, clearly defines the essence of a single premium cash value policy, which is that it only requires one payment to be fully paid up. Other options either misrepresent the payment structure or describe features not applicable to this type of policy, reinforcing the uniqueness of option A in accurately capturing the concept being tested.