68. Continuing a mini-series on life insurance, he discusses life insurance for spouse (who does not work or who works part-time). You are the wage earner in a typical family, with $55,000 gross annual income. . Use the easy method to determine how much insurance she should carry. To Buy: 1800-258-5899 (9:30 AM to 6:30 PM), For Existing Policy: 1800-103-0003/ 1800-180-0003/ 1800-891-0003, Managing Director & Chief Executive Officer. This method is called the non-working spouse method. Factors That Affect Life Insurance Premiums When can I switch from original Medicare to an Advantage plan? The rule of 70 is a means of estimating the number of years it takes for an investment or your money to double. 47. 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. Life insurance companies issue a lot of paperwork. E. An immediate annuity allows an individual to receive payments from an annuity beginning at once. E. Cash value life. E. Made all annuities tax free. Of course, it would be a tragedy were something to happen to your spouse. D. Your premium will not increase when you renew it. Pam just started working at XYZ Widget Company and finally wants to get insurance coverage. C. The policy will return all premiums if you survive to the end of the policy. Easy method B. Dual income, no kids method C. Formal calculation method D. Nonworking spouse method E. Family needs method, 30. Course Hero is not sponsored or endorsed by any college or university. a) A client with amyotrophic lateral sclerosis (ALS) tells the nurse, "Sometimes I feel so frustrated. 67. Jeff Willis has five kids and more debt than the, average family. A. Incontestability clause B. Misstatement of age provision C. Naming a beneficiary D. Policy reinstatement E. The grace period, 57. $40,000 B. Which of the following is NOT a type of permanent insurance? NOT BANK GUARANTEED. D. Insurer. C. Pay for a vacation. Catherine Carey has made the choice to stay home, and raise her three kids while her husband works. Life insurance benefits may be used to pay off a home mortgage or other debts at the time of death. Firstly, spouses who work part-time or who do not work have insurability interest, which should be maximized. Megan wants to purchase a life insurance policy that will allow her to invest in stock. A. Using the DINK method, what should be your need for life insurance? She may need to change her coverage as her needs change. 3 days. C. Convertible term. is your life insurance need based on the easy method? D. You can convert your policy to a permanent type at the end of the term. . method, what should be your need for life insurance? Estimate your total You pay premiums each year for the rest of your life. Step 1 Non-working spouse method: This method is form of insurance coverage that allows you to s. C. Administrative fee. This method is meant for those with typical families where both spouses work, are in good health, with average debt, and with no more than three kids. You policy will continue for one year. 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. 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. Try refreshing the page, or contact customer support. D. A fixed annuity is one where the investments made into the annuity are variable. How long is the grace period for health insurance policies with monthly due premiums? \text{Tuition and fees receivable (net of doubtful accounts of \$12)}&&\text{230}\\ Tim and Allison are married and have two children, ages 4 and 7. \text{Cash and cash equivalents}&&\text{\$\hspace{18pt}734}\\ You want to purchase a life insurance policy that pays a dividend. fhp>5UN.es r}"n ~c|A1mHNK|i^f>Gk aYT)s7z~fO9~krcVr2@)KTQirUQ!AP+jthG;l!9|R^7|o What kind of policy is he planning to purchase? 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. Insurance Contract Characteristics | Traits Specific to Insurance Contracts, Future Value Formula & Examples | How to Calculate Future Value. Sum Assured fixed at Rs. 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. Cash value. Can I stay on my parents insurance if I file taxes independently? Which of the following policies should she buy? Fred bought life insurance when he was 47, although he told the insurance company that he was 42. B. This is a very common type of policy taken by homeowners who want to support their children financially. Easy method B. Dual income, no kids method C. Formal calculation method D. Nonworking spouse method E. Family needs method. Goods & Services Tax will be charged on the premium amount. D. Limited payment. E. Proceeds left with the company. \text{Pledges receivable (net of doubtful accounts of \$280)}&&\text{5,872}\\ All of the following are major rating agencies for insurance except A. 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. 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 the easy method to determine how much life insurance you should carry. GST On Life Insurance Group life B. How much term does a non-working spouse get? Under the Multiple of Income method of estimating, life insurance needs, what important factor is excluded, 98. What is the most important part of an insurance agents job? Instruction$86,100 Which of the following statements is correct? Life insurance companies do realize that taking care of the house is an equally important as earning an income for the household. How much storage space is required? A. Which of the following life insurance policies should she apply for? 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. A. Waiver of premium disability benefit B. If marriage has taken place after the policy commencement date, you can add the Spouse to your policy within one year from the date of the marriage. Required Reserve Ratio Formula | How to Calculate Required Reserves, Monthly Payment Formula | How to Calculate Loan Payments. A. Experts are tested by Chegg as specialists in their subject area. C. Final life payment. You have no other debt. Allison is a "nonworking" spouse who devotes all of her time to household activities. The DINK method has you adding half of all your debts to your funeral expenses. In other words, if a person's death would cause you significant financial hardship, it's an insurable interest. When using the rule of 70, the number 70 is used in the calculation. 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. Mortgage = $190,000; Auto loan = $10,000; Credit card balance = $2,000; and other debts = A. Waiver of premium disability benefit B. You should be able to collect the life insurance payout within 30 to 60 days after you have submitted the completed claim forms and the supporting documents. Francisco and Maria have three children and want to complete a detailed worksheet to determine the amount of life insurance they need to purchase. It is better to fund a fixed annuity before fully funding your IRA, Keogh, or 401(k). What kind of policy would you want to purchase? Catherine Carey has made the choice to stay home and raise her three kids while her husband works. \textbf{Assets}\\ $10,000 + ($30,000 / 2) + ($11,000 / 2) + ($5,000 / 2) = $10,000 + $15,000 + $5,500 + $2,500 = $33,000. Using time value of money and assuming you could invest your Time Value of Money Formula & Examples | What is Time Value of Money? D. Life income option. 25,00,000 which will remain same throughout the Policy Term. Types of Life Insurance Which of the following provisions will affect the amount of money his beneficiaries will receive? Here's how to calculate the estimated life insurance need: 1. E. No interest will accumulate for any loans related to life insurance. They have determined that their annual income is $70,000 and their net worth is now $150,000. Can non-working spouses qualify for a life insurance? A. Renewable term B. Multiyear level term C. Decreasing term D. Limited payment E. Single year term. 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. What is the amount of life insurance they should carry using the easy method? 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. B. D. Her parents. Holding Period Return (HPR) Formula & Examples | What is HPR? 25. E. It is permanent life insurance. You can convert your policy to a permanent type at the end of the term. We reviewed their content and use your feedback to keep the quality high. D. Allowed annuities to be purchased for individual retirement accounts. As a member, you'll also get unlimited access to over 88,000 \text{Property, plan, and equipment (net of accumulated depreciation of \$104,240)}&&\text{281,404}\\ A. 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. This method has you multiplying your annual gross income by 70% and then multiplying that by 7. \text{Liabilities:}\\ Which of the following is a poor choice for the amount of protection offered for an individual? Also, if you try to make up some of that yourself, you lose income and income potential. - Definition, History & Examples, Stealth Advertising: Definition & Examples, What is Crowdsourcing? D. The policy features. 66. Using the easy A term insurance plan will also help to save taxes on the premiums under Section 80C of the IT Act. Group life C. Limited life D. Universal life E. Variable life, 52. Which of the following policies would meet her needs? A deferred annuity allows an individual to receive payments from an annuity immediately. 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 . \textbf{STEINER COLLEGE}\\ old? But from a financial perspective, it does not have to be a crisisif you have good planning. 44. \quad\text{Total assets}&&\underline{\underline{\text{\$\hspace{1pt}455,670}}}\\[5pt] The Policy will terminate after payment of this benefit. What method would probably be the best. D. The beneficiary can borrow any amount up to the total benefit. Limited installment payment. Your needs will also change over time, so your life insurance needs may also change over time. You can get your paper edited to read like this. Investment earnings received for the period were $3,960, of which$2,070 was donor restricted for scholarships. In order to have a valid policy, the owner must: To clearly illustrate your insurable interest. Prepare journal entries in good form to record the foregoing transactions for the year ended June 30, 2020. 74. 41. the near future. insurance needs for a family whose youngest child is 5 years A. 'QP2?^03dw 6x ;!;RTkz}Sc;)iI $50,000 C. $80,000 D. $100,000 E. $180,000 B. 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. Which of the following riders would allow her to receive cash now? The first method is called the easy method. Dividend policy B. Nonparticipating policy C. Mutual policy D. Participating policy E. Stock policy. This method is called the non-working spouse method. Insurance Premium You heard about several methods you can use to calculate your life insurance needs. This is a method that has you multiplying your annual gross income by 70% and then multiplying that by 7. 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. They have determined that their annual income is $70,000 and their net worth is now $150,000. money elsewhere for a 7 percent annual yield, calculate the net cost of insurance. to work after your death. All rights reserved. - Definition & Examples, Strategies for Effective Consumer Relations, Cross-Selling in Retail: Techniques & Examples, Working Scholars Bringing Tuition-Free College to the Community. At minimal, you want a policy to provide at least 5 years worth of income replacement, until you can balance out things. Estimate how much life insurance Tim and Allison should carry. Not necessarily. For example, say you have a remaining mortgage of $30,000, a credit card balance of $11,000, and a personal loan of $5,000. B. 78. E. Proceeds left with the company. A. Adjustable life B. Straight life. We look forward to speaking with you. 24. D. Standard & Poors. This gives you 7 years of wages at 70%. If you mean you want to add life insurance coverage for your new spouse on your life insurance policy, you can contact your life insurance agent or carrier and request what it would cost to add a spouse rider for life insurance coverage to your existing policy. TERMS OF SERVICE 5EPhGD!A'b1^:x[)(2##19pH`G0v#/(5;dI(D Your spouse expects to continue to work after your death. Surrender charge. Which of the following provisions should she take action on? 26. Fixed annuity B. Plus, get practice tests, quizzes, and personalized coaching to help you I would definitely recommend Study.com to my colleagues. The settlement option in which the company acts as trustee and pays interest to the beneficiary is called A. Lump-sum payment. Estimate how much life insurance Shaan and Anita should carry. A. Holly and Matt want to use the "nonworking" spouse method to determine the amount of life insurance coverage they need. \textbf{Liabilities and Net Assets}\\ Steiner Colleges statement of financial position for the year ended June 30, 2019, is presented here. Which of the following is a charge you will pay when you purchase a variable annuity? 25,00,000 which will remain same throughout the Policy Term. Whole life B. Allison is a "nonworking" spouse who devotes all of her time to household activities. To unlock this lesson you must be a Study.com Member. There are many situations to consider, and the methods you just heard about may or may not fit your needs. How to Buy Life Insurance: Steps & Choices, App. 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. E. Child. Insurance Need: ? After you purchase a life insurance contract, you have a "free look" period that lasts A. An error occurred trying to load this video. Term insurance C. Whole life insurance D. Variable annuity E. 401(k). D. Life income option. 45. E. It is better to fund an IRA, Keogh, or 401(k) before buying an annuity. 93. Watch on to see what they are. Your annual income is $60,000. Copyright 2023 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01, determine the minimum amount of life insurance you should carry, the easy method to determine how much life insurance you should carry. Polly wants the opportunity to change the amount she pays for her annual premium through the life of her insurance policy without changing her coverage. Deferred annuity C. Whole life insurance D. Immediate annuity E. Universal life insurance. B. Bens beneficiaries. For more details on risk factors, terms and conditions please read the Sales Brochure carefully before concluding a sale. 42. In contrast to the biopsychosocial model, the biomedical model views health as ___________. The Tax Reform Act of 1986 A. Contract. What. A. E. None of these is correct. And, lastly, the family need method is 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 from it. 5% B. 1.5 lacs under Income Tax Act, 1961 and tax benefit may vary from assessee to assessee. 39. You have a spouse, two kids, a dog and a mortgage - a typical family. Expenses incurred resulted in the release of $7,320 in net assets with donor restrictions. Get unlimited access to over 88,000 lessons. makes about $38,000 annually. ht _rels/.rels ( J1!}7*"loD c2Haa-?_zwxm 81. 401(k) plans. Fixed Annuities are long-term insurance products. Welcome to the Wealth Curve Talk Podcast. Which method are they using to determine their life insurance needs? old? This website helped me pass! Nonworking spouse method is a type of insurance policy where without working you can support your children until they turn 18 years old. $196,000 C. $280,000 D. $400,000 E. $430,000, 83. E. Pay taxes. 58. Look through financial records. D. 30 days. A. nonworking spouse whose youngest child is 5 years old? Which of the following products allows an individual to receive payments beginning now? Which of the following riders provided an additional benefit for his heirs? Fixed annuity B. Investment Advisory Services provided by Smallwood Wealth Investment Management, LLC, an SEC registered investment advisor. \quad\text{Accounts payable and accrued liabilities}&&\text{\$\hspace{5pt}21,130}\\ What percentage of your income should you spend on life insurance? Using the "nonworking" spouse method, what should be the life insurance needs for a family whose youngest child is 5 years old? We want to help you with that. Which of the following riders should she consider? Which of the following riders should he consider? D. Spend money. C. Identified annuities to be the same as certificates of deposit. E. 60 days. In many cases, the answer is yes. One of the most common questions we hear is, Can my non-working spouse qualify for life insurance? The answer is yes! Which method are they using to determine their life insurance needs? D. A deferred annuity allows an individual to receive payments from a life insurance policy at some future date. Allowed whole life insurance policies to be sold. But from a financial perspective, it does not have to be a crisisif you have good planning. '`Wb L@b[[s8M,I=s:sr<3Y=w0&)_f& (_X>pO&|`r;ZXeEP4DDi_/%"M{s1&E^}W>f,Kc,$vt ls-`p]s+>hBQ/nmBNO`majcNz@vr2LvDZ \NTef9F+ 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. Diffusion Let us complete them for you. Which of the following is NOT a factor that affects the price a company charges for a life insurance policy?
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