Victor and Maria Hernandez Contemplate Switching Life Insurance Policies

Victor and Maria Hernandez have a total of $230,000 in life insurance. Victor has a $50,000 cash-value policy purchased more than 20 years ago soon after when they married and a $130,000 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 neighbor who is a life insurance agent. He thinks that they need to change their policy mix because, he says, they are inadequately insured. Specifically, the agent has suggested that Victor cash in his cash-value policy and buy a new variable-universal life insurance policy.

1. If Victor cashes in his policy, what options would he have when receiving the cash value?
2. The input in the box below will not be graded, but may be reviewed and considered by your instructor.
5. 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 a 4 percent annual return. (Hint: UseAppendix A.1or theGarman/Forguecompanion website.) Round your answer to the nearest dollar. Round 'Future value of a Single Amount' in intermediate calculations to four decimal places.