What does the "excess interest benefit" refer to in life insurance?

The "excess interest benefit" in life insurance refers to the additional interest earnings that surpass the guaranteed minimum rates set by the insurer. This concept is particularly relevant in policies that have a cash value component, such as whole life or universal life insurance. These policies typically guarantee a certain minimum interest rate on the cash value, ensuring that policyholders receive some level of growth over time.

When the insurer credits interest that exceeds this guaranteed minimum, it is considered the excess interest benefit. This additional growth can contribute to the overall cash value of the policy, enhancing the financial benefit for the policyholder. It is essential for policyholders to understand how these excess interest benefits can affect their policy's performance and the long-term accumulation of values, as they reflect the insurer's investment performance and management capabilities.

The remaining options focus on different concepts related to interest and returns, but they do not accurately define the aspect of exceeding the guaranteed minimum, which is central to the understanding of the excess interest benefit.