Victor and Maria have a total of $200,000 in life insurance. Victor

has a $50,000 cash-value policy purchases more than 20 years ago when they were first married and a $100,000 group term policy through his employer. Maria has a $50,000 group term insurance policy through her employer. The couple has been approached by a life insurance agent who thinks that they need to change their policy mix because they have inadequate insurance. Specifically, the agent has suggested that Victor cash in his cash-value policy and buy a new variable-universal life policy.

1. If Victor cashes in his policy, what options would he have when receiving cash value?

2. Determine what the $16,000 in cash value in Victor's life insurance policy would be worth in 20 years if that sum were invested somewhere else and earned an 8 percent annual return. (Use the Garman/Forgue companion website.)

3. Would cashing in the policy be a wise decision? Why or why not?

4. As the Hernandez children are now grown and on their own, and both Victor and Maria are employed full-time, give general reasons why Victor may need more or less insurance.

5. Explain why it would be a bad idea for Victor to buy a variable-universal life policy.