Which of the Following Statements About the Guaranteed Purchase Option

question 29

Multiple Choice

Which of the following statements about the guaranteed purchase option is true?

• A)It is usually available with term insurance policies.
• B)The premium when an option is exercised is based on the insured's age at the time the original policy was issued.
• C)The option permits the insured to purchase specified amounts of life insurance in the future even if the insured has become uninsurable.
• D)If a guaranteed purchase option expires without being used,it can simply be exercised at a later date.

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Definitions:

Variable Costs

Expenses that change in proportion to the production output or sales volume of a company.

AVC

Average Variable Cost, calculated by dividing the total variable costs by the quantity of output produced.

AFC

Average Fixed Costs, which represent the fixed costs per unit of output, calculated by dividing total fixed costs by the number of units produced.

AVC

Average Variable Cost (AVC) is the total variable costs of production divided by the quantity of output produced, reflecting the cost per unit of varying the level of output.