Washington Life Producer Practice Exam

Which insurance policy provision allows the insured to access cash value during their lifetime?

1. Paid-up additions

2. Cash surrender value

3. Accelerated benefits

4. Rider benefits

The correct answer is: Cash surrender value

The provision that allows the insured to access cash value during their lifetime is the cash surrender value. This refers to the amount of money a policyholder can receive if they choose to terminate their policy before it matures or before the insured event occurs. It represents the savings component of permanent life insurance policies, such as whole life or universal life insurance, where a portion of the premiums goes into a cash value account that grows over time. When a policyholder decides to surrender the policy, they receive the cash surrender value, which can be used for any purpose. This can be an important financial resource for individuals who may need funds for emergencies, investments, or other personal financial needs during their lifetime, rather than waiting until the policy matures or the insured passes away. The other options mentioned provide different benefits that do not specifically relate to accessing cash value in the same manner. For example, paid-up additions refers to additional life insurance benefits purchased with accumulated dividends, accelerated benefits pertain to receiving part of the death benefit under certain conditions (like terminal illness), and rider benefits involve additional coverage options attached to the policy, which may not include cash value access.