MaryJo owns a whole-life insurance policy on her own life. She has accumulated $40,000 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. MaryJo can withdraw the entire $40,000 at any time, but doing so will forfeit her death protection.

Statement II is also true. MaryJo can borrow the $40,000, but she will lose all her death protection until the loan is paid back.

Statement III is true as well. If MaryJo dies, her beneficiary will receive the face value of the insurance policy, and the $40,000 in cash value becomes a survivorship benefit for other insureds.

Therefore, the correct answer is D, as statements I and III are true.

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