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Answer :
Final answer:
The cash value of John's $125,000 whole life policy is likely to reach $125,000 after his 66th birthday since whole life policies are structured to reach the death benefit amount towards the end of the mortality table, often set to age 100.
Explanation:
In reference to cash-value life insurance, the cash value of a policy is the amount that accumulates inside the policy as a result of premiums paid over time, investment income, and other factors. When John, who is 65 years old, makes his last premium payment on his $125,000 whole life policy, the key question here is when the policy's cash value will match the death benefit value of $125,000.
Typically, a whole life policy's cash value is designed to equal the policy's death benefit by the time the insured reaches the end of the mortality table, which is often set to age 100. With annual growth due to interest and dividends, the cash value will compound over time. However, without knowing the specific details of the policy's performance and growth rate, an exact age cannot be determined. For general policies, achieving a cash value equal to the death benefit is usually structured to occur by a specified age, often well beyond age 66.
Therefore, the correct answer is most likely d. The cash value will reach $125,000 after John's 66th birthday, as whole life policies are structured to grow over a long period and are not intended to reach the death benefit value immediately after the final premium payment. However, this is based on general practice and the actual outcome would depend on the terms and conditions of John's specific policy.
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