Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Types of Receivables

Financial Accounting

7. Receivables and Investments

Types of Receivables

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Multiple Choice

After the extended term life nonforfeiture option is chosen, the available insurance will be:

No insurance coverage will be available

The same face amount and period as the original policy

A reduced face amount for the same period as the original policy

The same face amount as the original policy, but for a shorter period of time

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Verified step by step guidance

Understand the concept of the extended term life nonforfeiture option: This option allows the policyholder to use the cash value of a lapsed life insurance policy to purchase term insurance. The term insurance will have the same face amount as the original policy but will cover a shorter period of time.

Review the mechanics of nonforfeiture options: Nonforfeiture options are designed to ensure that policyholders do not lose the value accumulated in their policy if they stop paying premiums. Extended term insurance is one of these options.

Analyze the key characteristics of extended term insurance: The face amount remains the same as the original policy, but the coverage period is reduced because the cash value is used to fund the term insurance.

Compare the extended term option with other nonforfeiture options: For example, reduced paid-up insurance provides a lower face amount but coverage for the lifetime of the insured, while extended term insurance maintains the face amount but shortens the coverage period.

Conclude that the correct answer aligns with the definition of extended term insurance: The same face amount as the original policy, but for a shorter period of time.