(1) Megan, age 32, is married and has a son, age 1. She recently purchased a cas
ID: 2759379 • Letter: #
Question
(1) Megan, age 32, is married and has a son, age 1. She recently purchased a cash-value life insurance policy that has the following characteristics: - The frequency and amount of premium payments are flexible. - The insurance and savings components are separate. - The interest rate credited to the policy is credited to certain market conditions, but the policy guarantees a minimum interest rate. - The policy has a back-end surrender charge that declines to zero over some time period. Based on the above characteristics, what type of life insurance did Megan purchase? Please give a detailed explanation of your answer for full credit.(1) Megan, age 32, is married and has a son, age 1. She recently purchased a cash-value life insurance policy that has the following characteristics: - The frequency and amount of premium payments are flexible. - The insurance and savings components are separate. - The interest rate credited to the policy is credited to certain market conditions, but the policy guarantees a minimum interest rate. - The policy has a back-end surrender charge that declines to zero over some time period. Based on the above characteristics, what type of life insurance did Megan purchase? Please give a detailed explanation of your answer for full credit.
Explanation / Answer
Answer:
The Policy purchased by Megan is a "Universal Life; Cash Value Life Insurance Policy".
Characteristics of a Universal Life; Cash Value Life Insurance Policy are as under;
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