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Benefits Intermediate: Whole Life Insurance

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1.
Policy loans never affect the cash value of your life insurance policy.
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False. Taking out a loan on your policy can affect its cash value.
2.
You can borrow from your whole life insurance policy, but only for education expenses.
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False. You can borrow for any reason, even to pay your premiums.
3.
In a whole life insurance policy, your guaranteed cash value is used to keep your premiums level.
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True. The cash value in permanent insurance is used to keep your premiums from increasing over time.
4.
Mutual insurance company dividends are taxable.
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False. Mutual insurance company dividends are a tax-free return of premium.
5.
You can borrow the cash value of your life insurance policy through _______.
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Tax-free loans. You can take out the cash value of your permanent policy through tax-free loans.