Finance

Which of the following statements about the traditional net cost metho

Which of the following statements about the traditional net cost method of measuring the cost of life insurance is (are) true? I. The traditional net cost method does not consider the time value of money. II. The traditional net cost method can show that life insurance has a negative cost. A) I only B) II […]

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Date: September 19th, 2020

Brad owns a cash value life insurance policy. Last year, the cash valu

Brad owns a cash value life insurance policy. Last year, the cash value increased by $300. Brad received $100 in policyowner dividends on the policy last year. Brad was the beneficiary named in his grandmother’s $50,000 life insurance policy. When she died this past year, Brad received $50,000. How much taxable income relating to life […]

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Date: September 19th, 2020

Which of the following statements about the use of interest-adjusted c

Which of the following statements about the use of interest-adjusted cost data for comparing life insurance policies is (are) true? I. Using interest-adjusted cost data provides a more accurate measure of the cost of life insurance than is provided if the time value of money is ignored. II. Its use is most appropriate in deciding […]

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Date: September 19th, 2020

Which of the following statements is (are) true with regard to using i

Which of the following statements is (are) true with regard to using interest-adjusted cost data when shopping for life insurance? I. Cost indexes apply to new policies and should not be used to determine whether to replace a policy. II. Cost indexes should only be used to compare similar plans of insurance. A) I only […]

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Date: September 19th, 2020

David purchased a $100,000 participating whole life policy. The annual

David purchased a $100,000 participating whole life policy. The annual premium is $2,280. Projected dividends for the first 20 years are $15,624. The cash value after 20 years will be $35,260. If the premiums were invested at 5 percent interest for 20 years, the premiums would grow to $79,156. If the dividends were accumulated at […]

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Date: September 19th, 2020

Each of the following helps to reduce federal estate taxes EXCEPT A)

Each of the following helps to reduce federal estate taxes EXCEPT A) the marital deduction. B) the applicable unified tax credit amount. C) life insurance policies in which the deceased had an incidents of ownership at the time of death. D) expenses such as the cost of the funeral, estate settlement costs, and probate costs. […]

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Date: September 19th, 2020

Which of the following statements describes how the net payment cost i

Which of the following statements describes how the net payment cost index differs from the surrender cost index? A) Dividends are ignored. B) The cash value is ignored. C) Premiums are not accumulated at a specified interest rate. D) Dividends are not accumulated at a specified interest rate.     ANSWER Answer: B

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Date: September 19th, 2020