A Disadvantage of Whole Life Policies Is That

question 27

Multiple Choice

A disadvantage of whole life policies is that

• A) the premiums are not predictable.
• B) they are much more expensive than term policies.
• C) the face value of the policy can change over time.
• D) the cash value is frozen and not available to policyholders.

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Definitions:

Debt

An amount of money borrowed by one party from another, under the condition that it is to be paid back at a later date, usually with interest.

Tax Rate

The share of profits or income that individuals or companies must pay to the government as taxes.

Market-To-Book Ratio

A financial ratio that compares a company's market value to its book value, used to evaluate whether a stock is under or overvalued.

WACC

The Weighted Average Cost of Capital is a method used to determine a company's capital cost, where each type of capital is weighted according to its proportion.