Question

19 the following policyholders missed paying their premium this month. whose policy is least likely to be cancelled after 31 days?
a. 24 - year - old derek, who has a minimally funded universal life insurance policy
b. 55 - year - old gina, who has a whole life insurance policy with a high csv
c. 61 - year - old vicky, who is the policyholder and the life insured of an extended health insurance policy
d. 43 - year - old alex, who has a 20 - year term insurance policy which he purchased last year

Explanation:

To determine whose policy is least likely to be canceled after 31 days, we analyze each option:

• Option a: A minimally funded universal life insurance policy (young policyholder) may have less cash value (CSV) or stability, so cancellation risk is higher.
• Option b: Whole life insurance with a high CSV (Cash Surrender Value) for a 55 - year - old (Gina) means the policy has accumulated value. Insurance companies are less likely to cancel a policy with high CSV as there is value they can access, and the policyholder has an incentive to keep it (due to the accumulated value).
• Option c: Extended health insurance policies are more about covering medical expenses and typically have less long - term cash - value - like components compared to whole life insurance. Also, the focus is on health coverage rather than long - term savings - oriented value accumulation.
• Option d: A 20 - year term insurance policy purchased last year. Term insurance has no cash value, and if the premium is missed, the insurance company has little incentive to keep the policy (as there is no accumulated value to draw from), so the cancellation risk is high.

Whole life insurance with a high CSV (option b) gives the insurance company a financial incentive to not cancel the policy (they can access the CSV if needed) and the policyholder also has an incentive to reinstate or pay the premium due to the accumulated value. So Gina's policy (option b) is least likely to be canceled.

Answer:

b. 55 - year - old Gina, who has a whole life insurance policy with a high CSV