Which of the following statements about life insurance cash values is (are)true?
I.Cash values are a result of the level premium method of purchasing life insurance.
II.The cash value of a policy must always exceed the policy's legal reserve.

Question

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Statement I is true. The level premium method of purchasing life insurance involves paying the same premium every year, with a portion of the premium going towards the cost of insurance and another portion going towards the policy's cash value accumulation.

Statement II is false. The cash value of a policy may or may not exceed the policy's legal reserve, which is the minimum amount of assets an insurer is required by law to maintain to ensure it can meet its obligations to policyholders. The cash value depends on various factors, such as the policy's type, premium, and investment performance.

Which of the Following Statements About Life Insurance Cash Values