Which method of analyzing the cost of life insurance does not consider the cash value of the policy in the analysis? A) traditional net cost method B) net payment cost index C) the Linton Yield D) the surrender cost index ANSWER Answer: B
Date: September 19th, 2020
Mary is interested in comparing life insurance policies. Rather than looking at the cost per thousand, she would like to compare the rate of return earned on the savings portion of the policy. Which of the following would be of the most interest to Mary? A) the policy’s Linton Yield B) the policy’s surrender cost […]
Date: September 19th, 2020
Which of the following statements is (are) true regarding taxation of life insurance? I. Life insurance proceeds paid in a lump-sum to a designated beneficiary are received free of federal income taxes. II. The policyowner must pay taxes annually on the amount by which the cash value of his or her life insurance policy has […]
Date: September 19th, 2020
Lisa does not want her life insurance policy included in her gross estate when she dies. Lisa can remove the life insurance policy from her estate if she does which of the following more than 3 years before she dies? A) borrow the cash value of the policy B) make an absolute assignment of the […]
Date: September 19th, 2020
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 […]
Date: September 19th, 2020
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 […]
Date: September 19th, 2020
Under the traditional net cost method, the net cost of life insurance for a given period (e.g., 20 years) is determined by which of the following formulas? A) the total premiums for the period less the policy reserve at the end of the period B) the total premiums for the period less the sum of […]
Date: September 19th, 2020
The first step in “shopping for life insurance” is to A) estimate the amount of life insurance to purchase. B) decide whether you want a policy which pays dividends. C) determine if you need life insurance. D) decide on the best type of life insurance for you. ANSWER Answer: C
Date: September 19th, 2020
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 […]
Date: September 19th, 2020
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 […]
Date: September 19th, 2020
