Asked by Varinder Sanghu on May 25, 2024
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A client, age 25, is deciding whether to purchase a $25,000, 20-year endowment policy or a $50,000, 20-payment life policy. He plans to build a house 10 years from now and to borrow the maximum available against any policy he owns at that time. How much more could the client borrow on the 20-payment life policy than he could borrow on the 20-year endowment policy? Refer to Table 12-2. (1 year = 12 months.)
Endowment Policy
A life insurance contract designed to pay a lump sum after a specific term or on death.
Life Policy
An agreement that awards a specified sum to a named beneficiary when the person covered by the policy dies.
Maximum Available
The highest amount or quantity that can be used, offered, or allocated from a particular resource or within a specific framework.
- Determine borrowing values from life insurance policies and acknowledge the critical role of the policy's cash value in underpinning loans.
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Learning Objectives
- Determine borrowing values from life insurance policies and acknowledge the critical role of the policy's cash value in underpinning loans.
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