Question

question 10 (1 point)
for the past five years, a person has had a $20,000 whole life insurance policy that has a cash value clause. the person decides to surrender the policy. at the time of surrender, the person will receive
a one - fifth of the $20,000 face value.
b $20,000 less the premiums paid.
c a calculated amount of money which includes the premiums paid as well as the interest on that money.
d a calculated amount of money that must be converted to a term life insurance policy.

Explanation:

To determine the correct answer, we analyze each option:

• Option a: There's no basis for the amount being one - fifth of the $20,000 face value. Whole - life insurance cash value isn't calculated this way.
• Option b: Subtracting $20,000 from premiums paid doesn't make sense as a method to calculate cash value.
• Option c: The cash value of a whole - life insurance policy with a cash - value clause is calculated by considering the premiums paid and the interest earned on that money over time. This is the standard way to calculate the cash value that the policyholder receives upon surrender.
• Option d: Surrendering a whole - life policy for term life conversion is not related to the amount received upon surrender in the context of cash - value calculation here.

Answer:

c. a calculated amount of money which includes the premiums paid as well as the interest on that money