Question

In: Finance

For each of the following statements, state whether you think the statement is true, false, or...

For each of the following statements, state whether you think the statement is true, false, or uncertain; and explain your answer.

  1. If an individual holds a whole-life insurance policy, it is not necessary to monitor the policy periodically.

  1. If the stock market is efficient, the best strategy is buy and hold for the long term.
  1. A young person should always buy term insurance and not whole-life insurance.

Solutions

Expert Solution

A) False.

It is important for an individual to monitor the whole life insurance policy periodically which helps to ensure policies are meeting the intended objectives and to help avoid unexpected tax consequences.

B) Uncertain

Even if buy and hold is one of the best strategies in stock market investment, we can't say it is always cen percent effective since the stock market is always uncertain.

C) True

Term insurance policy is typically good option for Life insurance for a young person because of the generally low premium. For a young person may not have a lot of income and further this option creates an affordable way to get the protection needed for a set of Number of years.


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