The Case in Point on Terminal Illness and Life Insurance

question 93

Multiple Choice

The Case in Point on Terminal Illness and life insurance suggests that a patient with a terminal illness can expect to sell his or her life insurance policy for a ________ amount if his or her life expectancy is ________.

• A)higher; short
• B)higher; long
• C)lower; short
• D)lower; not less than 3 months

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Definitions:

Gross Investment

The total amount of money spent on capital goods, or assets intended to produce future income, not accounting for depreciation.

Net Investment

The total amount spent on capital assets, like buildings and machinery, minus depreciation. It reflects the increase in the value of physical assets.

Depreciation

The gradual decrease in the economic value of the capital assets of a firm or nation due to wear and tear, obsolescence, or age, often accounted for in financial statements through depreciation expense.

Disposable Income

Income available to an individual or family after taxes, which can be spent or saved.