1. An individual purchases a $100,000 whole life policy on which he pays the first year premium of $1,020 and dies during the year. He could have purchased the same amount of term life insurance for $250. What happens to the $770 "overpayment" in this case?
2. Which of the provisions or clauses in this chapter are the most important to you, and why?
3. To what extent does the accidental death benefit provision of a life insurance policy violate the rules of good risk management?
4. State an advantage or disadvantage of purchasing a single-premium whole life policy. Explain your answer.
5. Is buying term and investing the difference a good idea? Why? Why not?