Question

24 nick is 47 years old and employed as a grocery store supervisor. he is single and does not intend to have a family in the future. he wishes to buy a permanent life insurance policy naming his niece as the beneficiary. he wants to be able to choose investments that are flexible and tax-sheltered. he does not intend to increase coverage in the future and prefers the least expensive option. which of the following is a suitable recommendation for nick?
options:
a. a ul policy with a level death benefit option
b. a participating whole life insurance policy
c. a ul policy with an indexed death benefit option
d. a nonparticipating whole life insurance policy

Explanation:

To determine the suitable life insurance for Nick:

1. Understand Nick's Needs: He wants a permanent life insurance, flexible investments (adjustable death benefit/coverage), tax - sheltered, least expensive, single (no family yet, so no need for increasing coverage tied to family), and no intent to increase coverage.
2. Analyze Options:

• Option a (UL with level death benefit): Universal Life (UL) offers flexible premiums and cash value growth. A level death benefit means the death benefit stays the same, which is less expensive than options with increasing benefits. It also allows flexibility in investments (adjusting premiums/cash value) and is a permanent policy.
• Option b (Participating whole life): Participating whole life has dividends but is usually more expensive than UL and has less flexibility in premiums and death benefit adjustments.
• Option c (UL with indexed death benefit): Indexed death benefit UL has more complex (and often more costly) death benefit structures tied to an index, which is more expensive than level death benefit UL.
• Option d (Non - participating whole life): Whole life (non - participating) has fixed premiums and death benefits, less flexibility than UL, and is typically more expensive than UL.

Since Nick wants flexibility (UL provides that), least expensive (level death benefit UL is less costly than indexed or whole life options), and no intent to increase coverage (level benefit suits this), Option a is suitable.

Answer:

a. A UL policy with a level death benefit option