9.1c

Question 1

More often used than the traditional method, the ______ takes into account and calculates the amount of interest a whole life policy will earn to more accurately compare it with other whole life policies. This method more accurately compares the true cost of similar whole life policies based on the insurer’s projected rate of return in interest.

Answer 1

Interest-Adjusted Cost Comparison Method

Question 2

A ______ takes into account the various cost factors of a whole life policy and computes an ‘index number’ to more easily compare it similar whole life policies.

Answer 2

Cost Index

Question 3

As an industry standard, cost index charts compare whole life policies based on ______ for 10-year and 20-year time periods, using an average annual rate of return in interest of 5%. In determining the cost of a policy, the lower the index number, the ______ it will be to the policyowner.

Answer 3

each $1,000 increment of the policy’s face amount

less costly

Question 4

The ______ is based on the assumption that a policyowner will surrender a whole life policy in the future and is calculated using the ______ cost comparison method. A lower surrender cost index number equates to a less expensive policy in comparison to other policies, thus providing a ______ once surrendered, assuming the policyowner does not keep the policy in force until death. The focus is on the surrender value of the policy for the policyowner, as opposed to the death benefit amount for the beneficiary.

Answer 4

Surrender Cost Index

interest-adjusted

higher cash value

Question 5

If, instead, the policyowner intends to keep the whole life policy in force until the death of the insured, the ______ is used to compare similar policies based on the death benefit provided to the beneficiary. This index is calculated using the traditional cost comparison method.

Answer 5

Net Payment Cost Index