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old? An error occurred trying to load this video. Let's review. What is the amount of life insurance they should carry using the "nonworking" spouse method? lessons in math, English, science, history, and more. Which of the following is NOT temporary insurance? 42. You have to drive them to and from school, oversee homework and music practice. This gives you seven years of wages at 70%. A. Sum Assured fixed at Rs. Purshe Kaplan Sterling Investments and Smallwood Wealth Investment Management, LLC are not affiliated companies. I highly recommend you use this site! 96. \text{Tuition and fees receivable (net of doubtful accounts of \$12)}&&\text{230}\\ \text{Net assets:}\\ D. Insurer. E. Proceeds left with the company. Which of the following statements is incorrect? Life insurance is a wise purchase of all individuals. The DINK method has you adding half of all your debts to your funeral expenses. Easy method B. Dual income, no kids method C. Formal calculation method D. Nonworking spouse method E. Family needs method, 29. A. In this case, the only type of life insurance policy you can buy is a guaranteed issue policy. B. Multiyear level term. Amy has a master's degree in secondary education and has been teaching math for over 9 years. Agency Problem in Finance Overview, Duties & Examples | What is the Agency Problem? Suppose you are 45 and have a $50,000 face amount, 15-year, limited-payment, They own a home with a $125,000 mortgage; they owe $25,000 for their car loans and have $22,000 in student loans. In this case, 18 years. Surrender charge. Besides getting money into the family, the non-working spouse holds a responsibility for everything that doesnt offer bonus, perks, and promotions. \quad\qquad\text{Total liabilities and net assets}&&\underline{\underline{\text{\$\hspace{1pt}455,670}}}\\ Group life C. Limited life D. Universal life E. Variable life, 52. B. Mortality and expense risk charge. Fixed Annuities are long-term insurance products. \quad\text{Total assets}&&\underline{\underline{\text{\$\hspace{1pt}455,670}}}\\[5pt] E. All of these affect the price. Determine an estimated regression equation that can be used to predict the overall score given the score for Shore Excursions. B. T&C Apply. Which of the following policies would meet her needs? B. Bens beneficiaries. Which of the following provisions allows her to keep her coverage if she is a couple of weeks late with paying her premium? Ask a Family Member's Financial Advisor. You policy will continue for one year. Get unlimited access to over 88,000 lessons. was specifically designed for someone in her situation? Please consult your independent tax advisor for details. In most cases, the life insurance offered to the stay-at-home spouse depends on the coverage and income of the earning counterpart. Allison is a "nonworking" spouse who devotes all of her time to household activities. Accidental death benefit C. Guaranteed insurability option D. Cost-of-living protection E. Accelerated benefits. nonworking spouse whose youngest child is 5 years old? Term insurance C. Whole insurance D. Variable annuity E. 401(k), 77. D. A benefit during the period it covers, such as 1, 5, 10, or 20 years. You heard about several methods you can use to calculate your life insurance needs. It equals the cost of replacing the property. Past performance of the investment funds do not indicate the future performance of the same. More thorough because it also considers employer provided insurance, Social Security benefits, and liquid assets. Your annual income is $60,000. succeed. Pam just started working at XYZ Widget Company and finally wants to get insurance coverage. A. Waiver of premium disability benefit B. 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. Your spouse expects to continue to work after your death. D. The beneficiary can borrow any amount up to the total benefit. When calculating an amount, ask yourself what it will cost to hire someone to replace your spouse and perform all the tasks your non-working spouse does throughout the day. 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Your premium will be higher than a whole life policy premium. A. A. Incontestability clause B. Misstatement of age provision C. Naming a beneficiary D. Policy reinstatement E. The grace period, 56. For example, your life insurance coverage amount will need to pay for funeral expenses, any outstanding debts, any remaining mortgage, and maybe even future financial support for a spouse or children. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these funds, their future prospects and returns. What method would probably be the best. Required Reserve Ratio Formula | How to Calculate Required Reserves, Monthly Payment Formula | How to Calculate Loan Payments. 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. Which of the following statements is correct? What kind of policy is he planning to purchase? Time Value of Money Formula & Examples | What is Time Value of Money? The cash value of the policy is expected to be C. Final life payment. False. C. 10 days. Georgia was supposed to pay her premium by the 15th of the month. B. A. Which of the following households most likely has the greatest need for life insurance? 25% C. 50% D. 75% E. 95%, 32. \end{array} All guarantees are based on the continued claims paying ability of the issuing company. B. A person who is named to receive the benefits from an insurance policy is a(n) A. \textbf{June 30, 2019}\\ The following transaction information (amounts in thousands) pertains to the year ended June 30, 2020. Estimate how much life insurance Tim and Allison should carry to cover Allison. E. It is better to fund an IRA, Keogh, or 401(k) before buying an annuity. A. Waiver of premium disability benefit B. In other words, you will have to show why you want to insure the individual. the near future. The "Nonworking" spouse method of estimating life insurance includes factors such as Social Security and liquid assets. b. the number of each item you have in stock Whole Life Insurance D. Decreasing term. Using the DINK method, what should be your need for life insurance? is your life insurance need based on the easy method? A. This is a very common type of policy taken by homeowners who want to support their children financially. You have to drive them to their after-school activities, preparing meals, keeping the household in order, etc. Investment Advisory Services provided by Smallwood Wealth Investment Management, LLC, an SEC registered investment advisor. It provides both a death benefit and a savings component. Which method are they using to determine their life insurance needs? For example, say you're the only one working in your family and your youngest child is three. A. You have a spouse, two kids, a dog and a mortgage - a typical family. 58. 2,10,000, (excluding taxes) premium payment term 10 years and policy term 20 years. Has the option to select any Coverage Option, any Optional In-Built Cover and any Benefit Payout Option at the stage of getting added for coverage under the policy. 36. The college received cash contributions without donor restrictions of$2,080, pledges to be collected in 2021 of $550, and cash contributions to the endowments of$335. Each of you An immediate annuity allows an individual to receive payments from an annuity beginning at once. Which of the following provisions will affect the amount of money his beneficiaries will receive? D. Life income option. The provisions of Income Tax Act, 1961 are subject to amendments made by the government from time to time. D. A deferred annuity allows an individual to receive payments from a life insurance policy at some future date. STEINERCOLLEGEStatementofFinancialPositionJune30,2019(amountsinthousands), AssetsCashandcashequivalents$734Short-terminvestments7,666Tuitionandfeesreceivable(netofdoubtfulaccountsof$12)230Pledgesreceivable(netofdoubtfulaccountsof$280)5,872Prepaidassets1,364Property,plan,andequipment(netofaccumulateddepreciationof$104,240)281,404Investments(atfairvalue,costof$162,000)158,400Totalassets$455,670LiabilitiesandNetAssetsLiabilities:Accountspayableandaccruedliabilities$21,130Depositsheldincustodyforothers700Unearnedrevenue900Bondspayable99,000Totalliabilities127,730Netassets:Withoutdonorrestrictions$104,000Withdonorrestrictions229,940Totalnetassets333,940Totalliabilitiesandnetassets$455,670\begin{array}{lrr} What is Life Insurance? c. the charge per 100 pounds to ship goods by truck 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. For a non-Working Spouse. The settlement option that pays the life insurance proceeds in equal periodic payments for a specified number of years after your death is called A. Lump-sum payment. Multiply the number of years until the youngest child reaches 18 by $10,000. Life insurance companies pay out the proceeds when the insured dies and the beneficiary of the policy files a life insurance claim. A. This method is used only to calculate child care needs, not the total financial needs of the family. Accidental death benefit C. Guaranteed insurability option D. Cost-of-living protection E. Accelerated benefits, 63. to work after your death. C. Individual retirement accounts (IRAs). Tax benefits/savings are subject to provisions under section 80 C, 80 CCC, 80 D, 10(10A), 10(10D) and other sections of the Income Tax Act, 1961. C. Your premium will not increase because your policy is renewable. Ag;sE2/yNNF;eF]!hiV^r^l PK ! Cash value. Headquartered at 199 Broad Street, Red Bank NJ 07701-2056 For example, say. Whole life B. Renewable term C. Convertible term D. Decreasing term E. Multiyear level. E. 60 days. We want to help you with that. Can you get life insurance on a spouse? It's a method that has you calculating your immediate needs upon death, adding it to the ongoing needs of surviving family members, and then subtracting your available assets. PK ! A. 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. It will take your youngest child 15 more years to reach 18. Using the sample chart that follows, find the column showing the age of the nonworking spouse 2. Group life C. Limited life D. Universal life E. Variable life, 51. C. Decreasing term. $196,000 C. $280,000 D. $400,000 E. $430,000, 83. 93. Fixed annuity B. D. Term. This method has you multiplying your annual gross income by 70% and then multiplying that by 7. It accumulates cash value. Most participating policies are sold by: 102. 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 C. It is more expensive than term insurance. D. Allowed annuities to be purchased for individual retirement accounts. Which of the following allows an individual to receive an amount of income that will change based on the income received from stocks or other investments over a certain period of time, or over his or her life? Which of the following is a poor choice for the amount of protection offered for an individual? 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. E. Proceeds left with the company. The big question is how much term life insurance for the non-working spouse (or stay-at-home parent) you should have. ^Individual death claims settled and reported in public disclosures for FY 2021-22. 69. A term insurance plan will also help to save taxes on the premiums under Section 80C of the IT Act. Jeff and Erica have two children. While it is wise to buy a life insurance policy to protect the income of the earning spouse, covering the non-working spouse may not seem as important. The Policy Term, Premium Payment Term and the premium payment mode remains the same for the Spouse, as yours. Call the State Commissioner's Office for your State. Which of the following is NOT a factor that affects the price a company charges for a life insurance policy? Look through financial records. C. Policyholder. nonworking spouse whose youngest child is 6 years old? Steiner is a private college. Can non-working spouses qualify for a life insurance? The maturity benefit is calculated for a 25 years old healthy male life who has opted for Canara HSBC Life Insurance iSelect Guaranteed Future with iAchieve plan option, monthly premium Rs.10,000 (excluding taxes), premium payment term 10 years and policy term 20 years through online sales channel. This term life policy will guarantee that you will pay the same premium for the duration of your policy. Tim and Tammy are updating their financial plan and are concerned that they might not have enough life insurance coverage for their family, which includes two children, ages 4 and 10. A. insurance needs using the DINK method. Investment earnings received for the period were $3,960, of which$2,070 was donor restricted for scholarships. They plan to purchase life insurance using this formula: (18 - Youngest child's age) $10,000. A. Judy and James have a 4-year-old child. Estimate how much life insurance Tim and Allison should carry. is =1.25\sigma = 1.25=1.25. What happens if you dont get life insurance? copyright 2003-2023 Study.com. To unlock this lesson you must be a Study.com Member. B. B. Insurance Premium He has since died. Work with our consultant to learn what to alter. The income replacement approach is a method of determining the amount of life insurance you should purchase. Using Exhibit 12-1, determine the average numbers of additional years males alive at Not necessarily. 73. C. It is better to fund a variable annuity before fully funding your IRA, Keogh, or 401(k). With the right term insurance policy in place, stay prepared for any adversity.