30. An insured has a policy with a stated cash value of $1,500 and the insured still owes $500 on a previous loan from this cash value. How much money will the insurer give the insured on the cash surrender value option?
Answer: B
The insurer will give the insured $1,000 on the cash surrender value option.
The cash surrender value is calculated by subtracting any outstanding loans from the stated cash value of the policy. In this case, the insured has a cash value of $1,500 and owes $500, resulting in a cash surrender value of $1,000.
A) $500
This option is incorrect because it represents only the amount owed on the loan. The cash surrender value must account for the total cash value minus the loan, which is not reflected here.
B) $1,000
This option is correct as it accurately reflects the cash surrender value. By subtracting the $500 loan from the $1,500 cash value, the insured is left with $1,000, which is the amount the insurer will provide.
C) $1,500
This choice is incorrect as it does not consider the outstanding loan. The full cash value cannot be given to the insured because there is a debt against it that must be repaid.
D) $2,000
This option is incorrect as it exceeds the stated cash value of the policy. The cash surrender value cannot be higher than the cash value, and thus this figure is not feasible in this context.
Conclusion
The correct answer, $1,000, is determined by subtracting the loan amount from the cash value of the policy. All other options fail to accurately reflect this calculation, either by failing to account for the loan or by exceeding the maximum cash value available.