Asked by Nacole Watkins on Jul 15, 2024
Verified
At 18,Jackson purchased a straight life insurance policy with a face value of $20,000.At a later time,he borrows a loan value against the cash surrender value of the policy.However,Jackson dies unexpectedly while the loan is still outstanding.Discuss the case.
Straight Life Insurance
A type of permanent life insurance where the insured pays a consistent premium throughout their lifetime, and the policy pays out a death benefit to the beneficiaries when the insured dies.
Loan Value
The maximum amount of money that a lender will provide to a borrower, often based on the value of the collateral pledged.
Cash Surrender Value
The amount of money an insurance policyholder can receive from the insurer by canceling the policy before it matures or the insured event occurs.
- Analyze the legal effects of insurance agreements in targeted scenarios.
- Comprehend the methods for altering life insurance policies and the consequences of such modifications.
Verified Answer
SS
Simranjit SinghJul 18, 2024
Final Answer :
In a straight life insurance policy,Jackson can continue premium payments until his death.Since a loan is outstanding at the time of his death,the insurance company can deduct the amount of the loan from the amount it pays to Jackson's beneficiary.
Learning Objectives
- Analyze the legal effects of insurance agreements in targeted scenarios.
- Comprehend the methods for altering life insurance policies and the consequences of such modifications.