MaryJo owns a whole-life insurance policy on her own life. She has accumulated $49,000 of cash value in the policy. Which of the following statements is/are true regarding this policy and the options MaryJo has?
I.She can withdraw the entire $40,000 at any time and forfeit her death protection
II.She can borrow the $40,000,but will lose all her death protection until the loan is paid back
III.If MaryJo dies tomorrow with no policy loan outstanding,her beneficiary will receive the face value of the insurance policy,while the $40,000 in cash value becomes a survivorship benefit for other insureds

Question

Quizplus · Accepted Answer

Statement I is true as MaryJo can withdraw the entire cash value at any time but, in doing so, she will forfeit her death protection. Statement II is also true as MaryJo can borrow the cash value, but she will lose all death protection until the loan is paid back. Statement III is true, as upon MaryJo's death, her beneficiary will receive the face value of the policy, and the $49,000 cash value will become part of the policy's death benefit, providing a survivorship benefit for other insureds. So, the correct choice is D.

MaryJo Owns a Whole-Life Insurance Policy on Her Own Life