An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?

An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?


A. It will increase each year during the next 5 years as the face amount increases each year.

B. It will increase because the insured will be 5 years older than when the policy was originally purchased.

C. It will remain the same for the new 5-year term.

D. It will decrease for the new 5-year term since the insured is now a lesser risk to the company.


Answer: B. It will increase because the insured will be 5 years older than when the policy was originally purchased.

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