Final answer:
Mike and Ike are identical twins with different life policies; Mike's term policy does not accumulate cash value, while Ike's whole life policy does and allows for loans and has level premiums. The false statement is that a) Mike can use cash value from his term policy to purchase whole life insurance.
Step-by-step explanation:
The question involves understanding different types of life insurance policies and their features. Mike and Ike are identical twins who are purchasing life insurance policies; Mike is buying a 10-year renewable term policy, while Ike opts for a whole life policy. All the provided statements are correct except for one. Statement A: Mike's policy will develop no cash value over the policy's term is true. Term policies do not accumulate cash value.
Statement B: Ike may eventually take out a policy loan is true. Whole life insurance policies do accumulate cash value which can be borrowed against. Statement C: Ike will have a level premium is true. Whole life policies typically have premiums that do not change over time. Statement D: Mike has the option of using his cash value to purchase a reduced amount of paid-up whole life insurance is false because term policies do not accumulate cash value, therefore Mike cannot use a non-existent cash value to purchase another policy. Therefore, All of the statements are true except A) Mike's policy will develop no cash value over the policy's term.