ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Upon the death of the policyholder, the insurance company pays the full death benefit of $25, 000. Money collected into the cash value is now the property of the insurer. Because the cash value is $5, 000, the real liability cost to the life insurance company is $20, 000 ($25, 000 – $5, 000).

Detailed explanation-2: -Most insurance companies typically will refund the unused portion of the money that the insured paid when he cancelled insurance policy. Only home insurance is subject to proration while car insurance is short.

Detailed explanation-3: -How Much Is a $1 Million Life Insurance Policy? The cost of a $1, 000, 000 life insurance policy for a 10-year term is $32.05 per month on average. If you prefer a 20-year plan, you’ll pay an average monthly premium of $46.65.

Detailed explanation-4: -So, the face value of a $10, 000 policy is $10, 000. This is usually the same amount as the death benefit. Cash Value: For most whole life insurance policies, when you pay your premiums some of that money goes into an investment account.