Your client Anastasia has had a permanent life insurance policy with you since 2006. She now needs access to some cash. One choice may be to take advantage of her cash value (CV) inside the policy. As such, you are reviewing how the adjusted cost basis (ACB) of the policy will change depending on the event. Which of the following statements is correct when calculating the ACB of a policy?

a)         ACB deceases when the premium is larger than the net cost of pure insurance.

b)         ACB increases when there is a withdrawal from the policy.

c)         ACB decreases when interest is paid on a policy loan.

d)         ACB decreases when a policy loan is made.

Answer rating: 100% (QA)

The correct answer is d ACB decreases when a policy loan is made An adjusted cost ... View the full answer