What is the maximum amount William could borrow from this policy if it has been in force ten years?

Question

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What is the maximum amount William could borrow from this policy if it has been in force ten years?

Quizplus · Accepted Answer

According to the table, the cash value of the policy after 10 years is $16,520. The maximum amount William could borrow is typically 90% of the cash value, which is $14,868. However, the question asks for the "maximum" amount, so we must take into account any outstanding loans and accrued interest. The policy loan balance after 10 years is $618, so the maximum amount William could borrow is $14,250 (i.e. 90% of $15,902, which is the cash value minus the loan balance). Therefore, the best choice is B.

​ What Is the Maximum Amount William Could Borrow from This

What Is the Maximum Amount William Could Borrow from This