Your annual premium is $1,000. Expenses incurred resulted in the release of $7,320 in net assets with donor restrictions. Of course, it would be a tragedy were something to happen to your spouse. Straight life C. Ordinary life D. Term life E. Cash value life. The cash value of the policy is expected to be This is a very common type of policy taken by homeowners who want to support their children financially. \textbf{June 30, 2019}\\ What method would probably be the best. 97. E. An insurance company will calculate the annual amounts to pay each person for an annuity. A. The premium so collected in advance shall only be adjusted on the due date of the premium. The rule of 70 is a calculation to determine how many years it'll take for your money to double given a specified rate of return. old? The human-life approach is a method of calculating how much life insurance is needed for a family that is based upon their financial loss when the insured person in the family passes away. Earnings Per Share Overview & Formula | How to Calculate EPS, Capital Budgeting Decisions | Examples, Techniques & Analysis, Activity-Based Costing | Formula, Examples & Benefits. B. Renewable term. \textbf{Liabilities and Net Assets}\\ Which of the following riders provided an additional benefit for his heirs? What. Under the Multiple of Income method of estimating, life insurance needs, what important factor is excluded, 98. Collection of advance premium shall be allowed within the same financial year for the premium due in that financial year However, where the premium due in a financial year is being collected in previous financial year, the premium may be collected for a maximum period of three months in advance of the due date of the premium. I highly recommend you use this site! fhp>5UN.es r}"n ~c|A1mHNK|i^f>Gk aYT)s7z~fO9~krcVr2@)KTQirUQ!AP+jthG;l!9|R^7|o you owe $11,000 on car loans, $2,000 in personal debt, and $3,000 in credit card 40. Quickly and professionally. Claim Settlement Ratio Estimate how much life insurance Tim and Allison should carry to cover Allison. 59. C: Consumer Agencies & Organizations, CLEP Financial Accounting: Study Guide & Test Prep, Introduction to Financial Accounting: Certificate Program, High School Marketing for Teachers: Help & Review, How to Choose a College: Guidance Counseling, UExcel Workplace Communications with Computers: Study Guide & Test Prep, Effective Communication in the Workplace: Certificate Program, Effective Communication in the Workplace: Help and Review, CLEP Principles of Macroeconomics: Study Guide & Test Prep, Intro to Excel: Essential Training & Tutorials, Information Systems and Computer Applications: Certificate Program, GED Social Studies: Civics & Government, US History, Economics, Geography & World, What is Whole Life Insurance? 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. Fixed Insurance products and services offered through Ash Brokerage or Smallwood Associates, Ltd. Estimating Your Life Insurance Requirements(continued) The "Nonworking" Spouse Method. True. What happens if you don't pay your health insurance deductible? C. Your premium will be the same for the duration of your policy. Which of the following policies should she buy? B. 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. 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. B. Mortality and expense risk charge. A. Tim and Allison are married and have two children, ages 3 and 6. Accidental death benefit C. Guaranteed insurability option D. Cost-of-living protection E. Accelerated benefits. Here's how to calculate the estimated life insurance need: 1. You can convert your policy to a permanent type at the end of the term. Course Hero is not sponsored or endorsed by any college or university. D. Term life insurance plans. You policy will continue for one year. makes about $38,000 annually. Term C. Credit life D. Endowment life E. Adjustable life, 53. In this case, the only type of life insurance policy you can buy is a guaranteed issue policy. Holly and Matt want to use the "nonworking" spouse method to determine the amount of life insurance coverage they need. 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. What percentage of your income should you spend on life insurance? The family needs approach requires you to purchase enough life insurance to allow your family to meet its various expenses in the event of your death. NOT BANK GUARANTEED. DINK stands for double income, no kids. 700 cartons to be stored. You have no plans to increase the size of your family in 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. 79. A. Adjustable life B. The following transaction information (amounts in thousands) pertains to the year ended June 30, 2020. A. The capital retention method is a method of determining the amount of life insurance needed by using an interest-only model to support your family. 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. D. Term. Using the "nonworking" spouse method, what should, be the life insurance need for a family whose youngest, 95. \quad\text{Accounts payable and accrued liabilities}&&\text{\$\hspace{5pt}21,130}\\ You are the wage earner in a typical family, with $55,000 gross annual income. A. Life Insurance Underwriting B. It accumulates cash value. Of course, it would be a tragedy were something to happen to your spouse. The premium shall be adjusted on the due date even if it has been received in advance. Yes! Let us have a look at your work and suggest how to improve it! A process has specification limits of LSL 5 540 and USL 5 550. 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. Dividend policy B. Nonparticipating policy C. Mutual policy D. Participating policy E. Stock policy, 33. D. A fixed annuity is one where the investments made into the annuity are variable. Net deposits returned to students totaled $10. A. Adjustable life B. Estimate your total Most people buy life insurance to A. D. Life income option. The average cost of life insurance is $27 a month. \quad\text{Bonds payable}&&\underline{\text{\hspace{10pt}99,000}}\\ We look forward to speaking with you. 82. The recommendation is to have seven to ten years of life insurance. In order to have a valid policy, the owner must: To clearly illustrate your insurable interest. The sooner a person is likely to die, the lower the premiums he or she will pay. Wendy has had a life insurance policy for five years. They have determined that their annual income is $70,000 and their net worth is now $150,000. Which of the following riders should she consider? Which of the following is NOT temporary insurance? Annuity Formula, Calculation & Examples | What is an Annuity? Amy bought a life insurance policy and named Ben as her beneficiary. 39. is =1.25\sigma = 1.25=1.25. \text{Property, plan, and equipment (net of accumulated depreciation of \$104,240)}&&\text{281,404}\\ Now, you take this number and subtract your available assets from this number. If their youngest child is 5 years old, how much do they need? insurance needs using the DINK method. A. Your spouses cover must be useful to pay for childcare expenses and all the help you need around the house. To unlock this lesson you must be a Study.com Member. Features of Life Insurance B. Estimate how much life insurance Tim and Allison should carry. Your rates will vary based on your unique circumstances, just as they would if you were single. E. All of these affect the price. Its free, with no obligation. 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. Further, you estimate that your funeral will cost $6,000. But from a financial perspective, it does not have to be a crisisif you have good planning. The investment risk in investment portfolio is borne by the policyholder. 46,800/- is calculated at the highest tax slab of 31.2%(including 4% cess) for an individual assessee on life insurance premium of Rs. NOT FDIC INSURED. 42. Adjusting entries for the period were made to increase Allowance for Doubtful Accounts by $20, to record depreciation expense of$26,400 (charged 70 percent to instruction and 30 percent to academic support), to adjust tuition revenue for an increase in unearned revenue of $10, and to recognize an increase in fair value of investments of$4,700 ($790 was related to investments restricted for scholarships,$1,610 was related to the permanent endowment, the remainder was related to net assets without donor restrictions). In this case, 18 years. 93. Ask a Family Member's Financial Advisor. How much storage space is required? B. Bens beneficiaries. a) A client with amyotrophic lateral sclerosis (ALS) tells the nurse, "Sometimes I feel so frustrated. money elsewhere for a 7 percent annual yield, calculate the net cost of insurance. U ^s1xRpbD#rYNrJC.aeD=U]Sik@X6G[:b4(uH%-+0A?t>vT9. T&C Apply. This problem has been solved! This last method is called the family need method. Your annual income is $60,000. Contract. 200 lessons. 'QP2?^03dw 6x ;!;RTkz}Sc;)iI Work with our consultant to learn what to alter. Certificates of deposit. E. An immediate annuity allows an individual to receive payments from an annuity beginning at once. Fred bought life insurance when he was 47, although he told the insurance company that he was 42. When you're ready to purchase life insurance, you'll need to decide what coverage amount you need so that all your financial obligations and needs are met upon your death. A. Adjustable life B. All guarantees are based on the continued claims paying ability of the issuing company. Question: Problem 12-10 Using the "Nonworking" Spouse Method to Determine Life Insurance Needs [LO12-2] Tim and Allison are married and have two children, ages 16 and 17 . Please consult your independent tax advisor for details. Which of the following policies would meet her needs? 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. \text{Investments (at fair value, cost of \$162,000)}&&\underline{\text{\hspace{5pt}158,400}}\\ 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. C. Pay for a vacation. 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A. Renewable term B. Multiyear level term C. Decreasing term D. Limited payment E. Single year term. A deferred annuity allows an individual to receive payments from a life insurance policy immediately. Create your account, 18 chapters | $18,000 C. $50,000 D. $130,000 E. $180,000, 84. In case of death of the Life Assured during the Policy Term, Sum Assured on Death basis the Coverage option opted, less cumulative monthly income(s) already paid shall be payable. You may not purchase insurance once your term ends. to work after your death. A. Group life C. Limited life D. Universal life E. Variable life, 52. . Whole life B. B. What is the cost of living in California? A. Waiver of premium disability benefit B. Jeff and Erica have two children. Sum Assured as chosen by the Working Spouse under the Plan. Please know the associated risks and the applicable charges, from your insurance agent or the intermediary or policy document issued by the insurance company. Find the factor on the chart where the nonworking spouse's age intersects with the working spouse's income from the column on the left 3. If you are a family and either you or your spouse stays home with the children, it is most likely that only the working souse has life insurance coverage because thats the case with most families in our country. 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. What are the stages of the General Adaptation Syndrome (GAS)? A.M. Best. A deferred annuity allows an individual to receive payments from an annuity immediately. Steiner Colleges statement of financial position for the year ended June 30, 2019, is presented here. 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 Replacement value is a method for determining what an insurance company will pay you in case your property is stolen or destroyed. 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. \text{Cash and cash equivalents}&&\text{\$\hspace{18pt}734}\\ B. d. a way of shipping goods to customers Anita is a "nonworking" spouse who devotes all of her time to household activities. You can get your paper edited to read like this. E. Proceeds left with the company. Which of the following is NOT a type of permanent life insurance? Riders in Insurance 47. You can convert your policy from permanent to term at any time. This is a very common type of policy taken by homeowners who want to support their children financially. The process standard deviaton 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. T&C apply. Which method are they using to determine their life insurance needs? D. Life income option. Most modern insurance covers let you add your spouse under the same policy for an additional premium, often lower than your own premium. Canara HSBC Life Insurance Company Limited is only the name of the insurance company and Canara HSBC Life Insurance Invest 4G is only the name of the unit linked insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns. Which of the following allows an individual to receive a fixed amount of income over a certain period of time, or over his or her life? B. Fixed annuity B. An interest-adjusted index is a method of evaluating the cost of life insurance by taking into account the time value of money, The lower the interest-adjusted index, the lower the cost of a 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. 38. E. None of these. The spouse who has to stay at home, looking after the children, cooking, and supporting the family often has a more tiresome job to do, than the working spouse. 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. 72. Lastly, it allows you to keep your future obligations: college, paying off debts, weddings, bar mitzvahs and bat mitzvahs, sweet sixteens, and all the other things that you want to do for your kids. 1. Using Exhibit 12-1, determine the average numbers of additional years males alive at 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. Time Value of Money Formula & Examples | What is Time Value of Money? With comprehensive coverage features like accidental benefit, increasing/ decreasing cover and whole life cover, the policy also offers a Spouse cover. Insurance Premium Buying from a financially strong company B. Under this plan option, a Monthly Survival Income shall be payable at the beginning of each month, starting from the Policy Anniversary coinciding with or following the Life Assured attaining age 60 years (last birthday) which shall continue till the end of the Policy Term or the death of the Life Assured whichever is earlier. With an available asset of $500,000 in savings, your life insurance requirement is $1,355,000 - $500,000 = $855,000. The DINK method has you adding half of all your debts to your funeral expenses. Endowment Plans If you have a multiyear level term policy, A. Purchasing a life insurance policy is a basic and inexpensive task. Nonworking spouse method is a type of insurance policy where without working you can support your children until they turn 18 years old. Jeff and Erica have two children. Cross), Campbell Biology (Jane B. Reece; Lisa A. Urry; Michael L. Cain; Steven A. Wasserman; Peter V. Minorsky), Psychology (David G. Myers; C. Nathan DeWall), The Methodology of the Social Sciences (Max Weber), Civilization and its Discontents (Sigmund Freud), Principles of Environmental Science (William P. Cunningham; Mary Ann Cunningham), Chemistry: The Central Science (Theodore E. Brown; H. Eugene H LeMay; Bruce E. Bursten; Catherine Murphy; Patrick Woodward), Give Me Liberty! C. The policy owner can borrow any amount up to the cash value of the policy. This communication strictly intended for individuals residing in the states of CA, CO, CT, DC, DE, FL, GA, IL, LA, MA, ME, NC, NH, NJ, NM, NY, OH, PA, RI, SC, TX, UT, VA. No offers may be made or accepted from any resident outside these states due to various regulations and registration requirements regarding investment products and services. Catherine Carey has made the choice to stay home and raise her three kids while her husband works. A. B. Income replacement is one of the main reasons many people, especially those who have loved ones depending on them financially, have life insurance. Straight life. Can someone be denied homeowners insurance? 3 days. A deferred annuity allows an individual to receive payments from an annuity at some future date. If you are new to Smallwood Wealth schedule a Wealth Curve Conversation. 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. C. Final life payment. Best Investment Options in India Using the DINK method, what should be your need for life insurance? Amy has worked with students at all levels from those with special needs to those that are gifted. 43. the income provider's salary. In other words, you will have to show why you want to insure the individual. E. All of these. 3.The maturity benefit calculated for a 25 years old healthy male who has opted for Canara HSBC Life Insurance Guaranteed Savings Plan with Guaranteed Savings Option through insurers website, annual premium Rs. 71. Which of the following statements is incorrect? Life insurance companies understand that taking care of the home is invaluable and is equally important as earning an income for the household. Allison is a "nonworking" spouse who devotes all of her time to household activities. Non-Working Spouse Method. C. It is more expensive than term insurance. This method is used only to calculate child care needs, not the total financial needs of the family. \end{array} was specifically designed for someone in her situation? Life insurance companies issue a lot of paperwork. The Tax Reform Act of 1986 A. They own a home with a $125,000 mortgage; they owe $25,000 for their car loans and have $22,000 in student loans. The maturity benefit in form of a lumpsum benefit equal to Rs.33,19,055 is paid at the end of the 20th year, provided the policy is in-force and all due premiums have been paid. Single adult living alone. B. This term life policy will guarantee that you will pay the same premium for the duration of your policy. The monthly survival benefit mentioned is an example of Life Assured opting for Sum Assured as 1Cr under Life Secure with Income plan option. Secondly, consider the value of the unpaid work done by a spouse who spends much of their time raising children. Surrender charge. The "Nonworking" spouse method of estimating life insurance includes factors such as Social Security and liquid assets. Maximum amount that can be claimed as deduction for education loan, How to File ITR for Income under 2.5 Lakh, How to Reduce Tax Liability with Term Insurance, Know the Tax Benefit on Saving for Retirement, Need for a Life Insurance for the Non-Working Spouse, Making claim settlement easy for your beneficiaries, How has the occurrence of covid-19 affected insurance in INDIA, Factors That Affect Life Insurance Premiums, Reasons for Life Insurance Claim Rejection, Unclaimed Amount Movement To-senior Citizens Welfare Fund. B. C. Policyholder. Also, if you try to make up some of that yourself, you lose income and income potential. D. A deferred annuity allows an individual to receive payments from a life insurance policy at some future date. Look through financial records. A. 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. Use the easy method to determine how much insurance she should carry. \qquad\text{Total net assets}&&\underline{\text{\hspace{5pt}333,940}}\\ You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Bonnie is most concerned about being able to buy additional insurance without undergoing medical exams. This is a method that has you adding half of all your debts plus funeral expenses. A. The first is the easy method. age 35 may expect to live. Preserved the tax advantage of annuities but curtailed deductions for IRAs. Protect the people who depend on the insured from financial losses caused by his or her death. Each of you Limited installment payment. Accidental death benefit C. Guaranteed insurability option D. Cost-of-living protection E. Accelerated benefits, 61. 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. 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? 80. Competition among companies with comparable policies can affect the price a company charges for life insurance. 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. Your spouse expects to continue to work after your death. 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. Which of the following provisions will affect the amount of money his beneficiaries will receive? This is a method that has you multiplying the number of years it takes the youngest child to reach 18 by $10,000. Frank, age 38, was hit by a car and died.