Assignment
1. Nonforfeiture clauses are a central part of certain types of life insurance policies.
a. What is meant by Nonforfeiture clauses?
b. Why, mathematically, do some life insurance policies have nonforfeiture options (what feature of a policy allows for nonforfeiture options)?
c. Provide three examples of nonforfeiture options.
d. If someone has been diagnosed with a terminal illness, should he or she continue paying his or her premiums? What would you recommend to this person regarding continuation of the life insurance policy?
2. How would you correctly respond to someone who argues that "interest should not be charged to an insured when taking out a policy loan as the insured is borrowing his or her own money"? Provide your answer factually, explaining the purpose of the interest requirement.