A Disadvantage of Using a Whole Life Policy for Saving

question 17

Multiple Choice

A disadvantage of using a whole life policy for saving is:

• A) earnings outside the policy can be greater
• B) federal income tax must be paid on the yearly cash value increases
• C) creditor protection is available if bankruptcy occurs
• D) since premiums must be paid to keep the policy in force, there is the semi-compulsory nature of saving

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Definitions:

Supply

represents the total amount of a product or service that is available for purchase at any given price in a market.

Price Change

Price change refers to the variation in the cost of goods and services over time.

Equilibrium Price

The price in a competitive market at which the quantity demanded and the quantity supplied are equal, there is neither a shortage nor a surplus, and there is no tendency for price to rise or fall.

Relatively Inelastic

Describes a situation where the demand for a good or service changes by a smaller percentage than changes in its price, indicating consumers' less sensitive response to price changes.