Cash accumulation method,
Definition of Cash accumulation method:
The cash accumulation method is used to rank policies according to their cost effectiveness. When comparing policies using this method, the one that has the most cash value at the end of the trial period is considered the better policy. This comparison requires that the premiums paid for each policy during the comparison period are equal. If they are not equal, then the difference between the two must be set aside, in order to make an apples-to-apples c.
Method of comparing the cost of life insurance policies with the same death benefit. The differences between the premiums paid to each policy are kept and accumulate interest at a given rate. At the end of a predetermined time frame, the largest amount accumulated from the difference of premiums paid is considered the most cost effective.
Cash accumulation method refers to a common technique for comparing different cash value life insurance policies. It assumes that the death benefits for the policies are equal and unchanging. The aggregate difference between the premiums paid into the two policies is then evaluated over time.
Meaning of Cash accumulation method & Cash accumulation method Definition