Income replacement is one of the main reasons many people, especially those who have loved ones depending on them financially, have life insurance. Life insurance companies pay out the proceeds when the insured dies and the beneficiary of the policy files a life insurance claim. C. You can convert your term policy to a permanent policy. \textbf{Assets}\\ One such cover by Canara HSBC Life Insurance Company is the iSelect Smart360 Term Plan. insurance needs using the DINK method. C. Decreasing term. Sell you the highest level of coverage available. Which of the following life insurance policies should she apply for? After you purchase a life insurance contract, you have a "free look" period that lasts A. The total debts of you and your spouse include the following: mortgage, $200,000; auto loan, $16,000; credit card balance, $2,000; and personal debts of $4,000. Bill is worried about being able to pay his premium if he is totally and permanently disabled before age 60. D. Life income option. 58. Use Exhibit 1-B. B. Easy method B. Dual income, no kids method C. Formal calculation method D. Nonworking spouse method E. Family needs method, 29. Life Insurance E. Child. A deferred annuity allows an individual to receive payments from a life insurance policy immediately. \textbf{(amounts in thousands)}\\ 51,84,468 which includes Guaranteed Sum Assured on Maturity, accrued Guaranteed Yearly Additions and Guaranteed Loyalty Addition. This is a method that has you multiplying your annual gross income by 70% and then multiplying that by 7. What is a Rider on a Life Insurance Policy? STEINERCOLLEGEStatementofFinancialPositionJune30,2019(amountsinthousands)\begin{array}{c} [Content_Types].xml ( Y0}GM A. This method is called the non-working spouse method. What is the amount of life insurance they should carry using the "nonworking" spouse method? You have to drive them to their after-school activities, preparing meals, keeping the household in order, etc. This is based on data provided by Quotacy for a 40-year-old buying a 20-year, $500,000 term life policy, which is the most common term length and amount sold. Straight life. You may need to change your coverage amounts when this happens. Find the CpC_pCp and CpkC_{pk}Cpk capability indexes if. - Definition, History & Examples, Stealth Advertising: Definition & Examples, What is Crowdsourcing? The insurance industry rule of thumb that a typical, family will need 70% of salary for seven years in order to, adjust for the financial consequences of a wage-earner's, death is known as which of the following estimation. E. It is better to fund an IRA, Keogh, or 401(k) before buying an annuity. This is a method that has you adding half of all your debts plus funeral expenses. Fixed annuity B. determine the minimum amount of life insurance you should carry. \text{Tuition and fees receivable (net of doubtful accounts of \$12)}&&\text{230}\\ Suppose that yours is a typical family. Group life B. 36. A. Ben. Shaan and Anita are married and have two children, ages 4 and 7. Using the "Nonworking" Spouse Method to Determine Life Insurance Needs. Past performance of the investment funds do not indicate the future performance of the same. Whole life B. 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Headquartered at 199 Broad Street, Red Bank NJ 07701-2056 Futures Contract in Finance Purpose & Examples | What Are Futures? C. 10 days. They own a home with a $125,000 mortgage; they owe $25,000 for their car loans and have $22,000 in student loans. D. 30 days. A. Incontestability clause B. Misstatement of age provision C. Naming a beneficiary D. Policy reinstatement E. The grace period, 57. What is the most important part of an insurance agents job? D. Your policy will have the same premium as other term policies. Which of the following provisions will affect the amount of money his beneficiaries will receive? B. Bens beneficiaries. Having life insurance for income replacement means if you pass away, your family could have the financial support they need to maintain the lifestyle they're used to. This is a method that has you multiplying the number of years it takes the youngest child to reach 18 by $10,000. Life insurance companies do realize that taking care of the house is an equally important as earning an income for the household. f. include taxes, storage fees, and handling costs, Purchasing a life insurance policy is a basic and inexpensive task, Life insurance benefits may be used to pay off a home mortgage or other debts at the time of death, The sooner a person is likely to die, the lower the premiums he or she will pay, Life expectancy for men is longer than that for women, Life insurance is a wise purchase of all individuals, The "Nonworking" spouse method of estimating life insurance includes factors such as Social Security and liquid assets, The "Family Need" method of estimating life insurance includes factors such as social security and liquid assets, Decreasing term pays less to the beneficiary as time passes, The beneficiaries of someone who dies by suicide will never be eligible to receive any benefits from his or her life insurance policy, Competition among companies with comparable policies can affect the price a company charges for life insurance, An interest-adjusted index is a method evaluating the cost of life insurance by taking into accounting the time value of money, The lower the interest-adjusted index, the lower the cost for life insurance policy, If you change your mind about your insurance policy, you have 60 days to return it to receive a refund of your premium, The most common settlement option for a life insurance program is the lump-sum payment, If you switch life insurance policies, you will automatically still be insurable, Annuities are more attractive for people who expect to live only a short time, The earnings from an investments in an annuity is taxed the same as earnings from an investment in the certificate of deposit, An administrative fee of $150 per year may be deducted to cover record-keeping and other administrative expenses related to a variable annuity, When you buy life insurance, you are making a contract with the company issuing the policy where you agree to pay a premium periodically, If you have misplaced a life insurance policy, your state's insurance commission may be able to help you locate it, Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese, Fundamentals of Financial Management, Concise Edition. This method has you multiplying the number of years it takes the youngest child to reach 18 by $10,000. Sum Assured as chosen by the Working Spouse under the Plan. D. Household with children. You heard about several methods you can use to calculate your life insurance needs. nonworking spouse whose youngest child is 6 years old? B. Renewable term. About ___ of the U.S. life insurance companies are stock companies. Yes. A. If you find the policy or discover paperwork that indicates a policy exists, contact the insurer. \text{Pledges receivable (net of doubtful accounts of \$280)}&&\text{5,872}\\ Catherine Carey has made the choice to stay home, and raise her three kids while her husband works. \text{Short-term investments}&&\text{7,666}\\ But life insurance rates can vary dramatically among applicants, insurers and policy types. For example, say. So with funeral expenses of $10,000, your life insurance requirement is: This next method is for those with just one wage earner in the family. Whole life. 25,00,000 which will remain same throughout the Policy Term. And a term insurance cover for house makers, non-working spouses, or say a housewife, proves helpful exactly here, ensuring your family tides over the financial damages in case something unfortunate happens. It equals the cost of replacing the property. Francisco and Maria have three children and want to complete a detailed worksheet to determine the amount of life insurance they need to purchase. A. For example, if your gross income is $65,000, then with the easy method, your life insurance requirement is ($65,000 * 0.7) * 7 = $318,500. Purchasing a life insurance policy is a basic and inexpensive task. Investments are not FDIC- or NCUA-insured, are not guaranteed by a bank/financial institution, and are subject to risks, including possible loss of the principal invested. Important Life Insurance Policy Provisions, After-Tax Rate of Return: Definition & Formula, Standard Deviation of Returns | Overview, Investment Volatility & Formula. If you have a multiyear level term policy, A. Anita is a "nonworking" spouse who devotes all of her time to household activities. Which of the following statements is incorrect? B. b. the number of each item you have in stock D. Life income option. With an available asset of $500,000 in savings, your life insurance requirement is $1,355,000 - $500,000 = $855,000. C. Policyholder. Further, you estimate that your funeral will cost $6,000. This term life policy will guarantee that you will pay the same premium for the duration of your policy. \quad\qquad\text{Total liabilities and net assets}&&\underline{\underline{\text{\$\hspace{1pt}455,670}}}\\ D. Fund expense. Your needs will also change over time, so your life insurance needs may also change over time. If you switch life insurance policies, you will automatically still be insurable, Annuities are most beneficial for individuals who expect to live only a short time, An investment in an annuity is the same as an investment in a certificate of deposit, Tuitionandfeesreceivable(netofdoubtfulaccountsof$12), Pledgesreceivable(netofdoubtfulaccountsof$280), Property,plan,andequipment(netofaccumulateddepreciationof$104,240), Investments(atfairvalue,costof$162,000), Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese, Fundamentals of Financial Management, Concise Edition. What is Life Insurance? Megan wants to purchase a life insurance policy that will allow her to invest in stock. The settlement option in which the company acts as trustee and pays interest to the beneficiary is called A. Lump-sum payment. \text{Liabilities:}\\ 82. D. Help you select the proper kind of protection within your financial boundaries. E. All of these. D. Allowed annuities to be purchased for individual retirement accounts. C. The policy owner can borrow any amount up to the cash value of the policy. C. It is better to fund a variable annuity before fully funding your IRA, Keogh, or 401(k). You have a spouse, two kids, a dog and a mortgage - a typical family. 68. Using the DINK method, what should be your need for life insurance? AssetsCashandcashequivalentsShort-terminvestmentsTuitionandfeesreceivable(netofdoubtfulaccountsof$12)Pledgesreceivable(netofdoubtfulaccountsof$280)PrepaidassetsProperty,plan,andequipment(netofaccumulateddepreciationof$104,240)Investments(atfairvalue,costof$162,000)TotalassetsLiabilitiesandNetAssetsLiabilities:AccountspayableandaccruedliabilitiesDepositsheldincustodyforothersUnearnedrevenueBondspayableTotalliabilitiesNetassets:WithoutdonorrestrictionsWithdonorrestrictionsTotalnetassetsTotalliabilitiesandnetassets$104,000229,940$7347,6662305,8721,364281,404158,400$455,670$21,13070090099,000127,730333,940$455,670. The rule of 70 and the rule of 72 give rough estimates of the number of years it would take for a certain variable to double. Which of the following provisions allows her to keep her coverage if she is a couple of weeks late with paying her premium? In other words, if a person's death would cause you significant financial hardship, it's an insurable interest. insurance needs for a family whose youngest child is 5 years True The "Family Need" method of estimating life insurance includes factors such as Social Security and liquid assets False Mutual life insurance companies specialize in the sale of nonparticipating policies False 42. Insurance needed. C. A life insurance policy allows an individual to receive payments from an annuity at once. At minimal, you want a policy to provide at least 5 years worth of income replacement, until you can balance out things. method, what should be your need for life insurance? Most participating policies are sold by: 102. C. It is more expensive than term insurance. Estimating Your Life Insurance Requirements(continued) The "Nonworking" Spouse Method. They plan to purchase life insurance using this formula: (18 - Youngest child's age) $10,000. B. Can non-working spouses qualify for a life insurance? 73. Variety of Fund Options and Portfolio Management Strategies, Loyalty Additions + Wealth Boosters + Return of Mortality Charges, Optional In-built covers to enhance coverage, Policy Term of 1 year or less than 1 year. The recommendation is to have seven to ten years of life insurance. $196,000 C. $280,000 D. $400,000 E. $430,000, 83. A. Adjustable life B. 74. Which of the following riders provided an additional benefit for his heirs? What is your life insurance need using the DINK method? Accidental death benefit C. Guaranteed insurability option D. Cost-of-living protection E. Accelerated benefits, 64. D. Her parents. DINK stands for double income, no kids. ht _rels/.rels ( J1!}7*"loD c2Haa-?_zwxm was specifically designed for someone in her situation? Accidental death benefit C. Guaranteed insurability option D. Cost-of-living protection E. Accelerated benefits, 63. Jeff Willis has five kids and more debt than the, average family. Continuing a mini-series on life insurance, he discusses life insurance for spouse (who does not work or who works part-time). The premiums & funds are subject to certain charges related to the fund or to the premium paid. Jeff and Erica have two children. Jeanne wants to purchase a life insurance policy with guaranteed premiums. C. Individual retirement accounts (IRAs). Further, making sure that your non-working or part-time working spouse has the maximum amount of coverage based upon your coverage is a fundamental of good planning. The sooner a person is likely to die, the lower the premiums he or she will pay. Allison is a "nonworking" spouse who devotes all of her time to household activities. 25% C. 50% D. 75% E. 95%, 32. Riders in Insurance Which of the following is NOT important when buying life insurance? Expenses incurred resulted in the release of $7,320 in net assets with donor restrictions. D. It builds cash value. \quad\text{Without donor restrictions}&\text{\$\hspace{1pt}104,000}\\ Fixed Insurance products and services offered through Ash Brokerage or Smallwood Associates, Ltd. A. The "Family Need" method of estimating life insurance includes factors such as Social Security and liquid assets, Mutual life insurance companies specialize in the sale of nonparticipating policies, Another name for straight term is renewable return-of-premium term, Decreasing term pays less to the beneficiary as time passes, Return-of-Premium term pays out all premiums plus interest to a beneficiary. Its like a teacher waved a magic wand and did the work for me. A. Pay off a mortgage. Under the Multiple of Income method of estimating, life insurance needs, what important factor is excluded, 98. Option to add Optional In-Built Covers or choose a Benefit Payout Option other than Lumpsum is not available to non-Working Spouse. $50,000 C. $80,000 D. $100,000 E. $180,000 B. Which method are they using to determine their life insurance needs? Todd plans to purchase a life insurance policy from a stock life insurance company. Then compute this number as an annual cost and multiply by the approximate number of years you would need those services, say until your children start going to college, or until you retire to take care of the house yourself. Tim and Allison are married and have two children, ages 4 and 7. If you have a conversion term policy, A. Your annual income is $100,000. For example, say you're the only one working in your family and your youngest child is three. 67. In contrast to the biopsychosocial model, the biomedical model views health as ___________. In this case, the only type of life insurance policy you can buy is a guaranteed issue policy. Term insurance B. A young employee is buying individual life insurance and is worried about the impact inflation will have on his life insurance coverage. Whole life B. Renewable term C. Convertible term D. Decreasing term E. Multiyear level. Get unlimited access to over 88,000 lessons. Judy and James have a 4-year-old child. Accidental death benefit C. Guaranteed insurability option D. Cost-of-living protection E. Accelerated benefits, 61. 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Earnings Per Share Overview & Formula | How to Calculate EPS, Capital Budgeting Decisions | Examples, Techniques & Analysis, Activity-Based Costing | Formula, Examples & Benefits. \quad\text{Accounts payable and accrued liabilities}&&\text{\$\hspace{5pt}21,130}\\ insurance needs for a family whose youngest child is 5 years 66. Student services 37,700 You have no plans to increase the size of your family in The provisions of Income Tax Act, 1961 are subject to amendments made by the government from time to time. This is a very common type of policy taken by homeowners who want to support their children financially. Estimate how much life insurance Tim and Allison should carry. The Rule of 72 is a calculation that estimates the number of years it takes to double your money at a specified rate of return. You are a dual-income, no-kids family. During the year, charges for tuition and fees were $244,500; scholarships were$16,300; and tuition waivers for scholastic achievement were $5,100. Its free, with no obligation. You estimate that funeral expenses will be $5,000. You want to purchase a life insurance policy that pays a dividend. All other trademarks and copyrights are the property of their respective owners. Easy method B. Dual income, no kids method C. Formal calculation method D. Nonworking spouse method E. Family needs method, 30. Group life C. Limited life D. Universal life E. Variable life, 52. Amy has worked with students at all levels from those with special needs to those that are gifted. Dividend policy B. Nonparticipating policy C. Mutual policy D. Participating policy E. Stock policy. Each earns $45,000 annually. The premium paid in Unit linked Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. The Policy will terminate after payment of this benefit. Your spouse expects to continue There are many life circumstances you need to consider, but depending on your circumstances, there are different methods you can use to figure out your life insurance coverage requirement. Multiply the number of years until the youngest child reaches 18 by $10,000. Such advance premium, if any, paid by the Policyholder shall not carry any interest. E. Credit life. You can convert your policy to a permanent type at the end of the term. 700 cartons to be stored. Wendy has had a life insurance policy for five years. Annuities are often purchased for A. Group life C. Limited life D. Universal life E. Variable life, 49. If their youngest child is 5 years old, how much do they need? A.M. Best. An error occurred trying to load this video. Which of the following products allows an individual to receive payments beginning now? A Limited Payment Policy is a while life policy that requires premiums to be paid for a certain period. What kind of policy is he planning to purchase? This method has you multiplying your annual gross income by 70% and then multiplying that by 7. E. Proceeds left with the company. Fixed Annuities are long-term insurance products. D. Standard & Poors. On occurrence of first death or diagnosis of terminal illness, to either of you, the sum assured on death corresponding to the affected life is paid and the policy continues with life cover for the other life with reduced premium. The "Nonworking" spouse method of estimating life insurance includes factors such as Social Security and liquid assets. Secondly, consider the value of the unpaid work done by a spouse who spends much of their time raising children. C. Ordinary life. A deferred annuity allows an individual to receive payments from an annuity at some future date. Answer . D. A deferred annuity allows an individual to receive payments from a life insurance policy at some future date. E. None of these is correct. Focus on Personal Finance: Online Textbook Help, Life Insurance Companies: Definition & Types, Psychological Research & Experimental Design, All Teacher Certification Test Prep Courses, How to Estimate Life Insurance Requirements. In most cases in India, the non-working spouse is a woman and it may be unimaginable to account for the financial implications in case of their absence, keep aside the emotional damage. A. Waiver of premium disability benefit B. 2003-2023 Chegg Inc. All rights reserved. D. Insurer. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. For example, say your immediate needs upon death are $10,000 for funeral expenses, $50,000 for emergencies, and $95,000 for mortgage, credit card, and college loans. A. All of the following are major rating agencies for insurance except A. E. It is permanent life insurance. Fred bought life insurance when he was 47, although he told the insurance company that he was 42. What kind of policy would you want to purchase? What happens if you dont get life insurance? The "Nonworking" spouse method of estimating life insurance includes factors such as Social Security and liquid assets.
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