Term Life Insurance
Life and Health Insurance FIN 3660
Chapter 5
Outline
Needs Met by Life Insurance
Personal Needs
Business Needs
Term Life Insurance
Characteristics of Term Life Insurance Products
Plans of Term Life Insurance Coverage
Features of Term Life Insurance Policies
2
Needs Met by Life Insurance
Personal Needs
Most common personal needs that life insurance can meet are:
Dependents’ support
Estate planning
Paying debts and final expenses
3
Dependents Support
Life insurance can provide funds to support the family members of a deceased loved one until they obtain new methods of support or until they adjust to living on a lower income.
The proceeds can also be used to supplement the family’s income.
In many jurisdictions, the beneficiary of a lump sum of money after the death of a loved one is usually not taxed on the money they receive.
4
Estate Planning
Estate- the accumulated assets an individual owns when he/she dies.
Will- a legal document that directs how the individual’s property is to be distributed after his death.
The executor is the person who is a personal representative of the person who has died with a valid will. (administrator if they person died without a valid will)
Estate Plan- considers the amount of assets and debts that he/she is likely to have when he/she dies and how best to preserve those assets so that they can be distributed as she desires.
Life insurance is an important part of the estate plan.
Can leave home to one child and life insurance policy to the other.
5
Debts and Final Expenses
A person’s death generally does not extinguish his/her debts.
In some cases the deceased estate isn’t large enough to pay his/her debts and final expenses.
If a life insurance policy is included in the estate plan, the proceeds can help pay those remaining debts.
6
Business needs
Two reasons for a business to purchase life insurance:
To provide funds to ensure that the business continues in the event of the death of an owner, partner, or other key person.
To provide benefits for its employees.
7
Business Continuation Insurance
An insurance plan designed to enable a business owner(s) to provide for the business’ continued operation if the owner or a key person dies.
Key Person Life Insurance- individual life insurance that a business purchases on the life of a key person.
The business owner is the beneficiary of the insurance policy if the person dies.
Buy-Sell Agreement- an agreement in which one party agrees to purchase the financial interest that a second party has in a business following the second party’s death and the second party agrees to direct his estate to sell his interest in the business to the purchasing party.
8
Characteristics of Term Life Insurance Products
Provides a death benefit only is the insured dies during the period specified in the policy.
The length of the policy term varies considerably from one policy to another.
Another common type of term life insurance cover the insured un ...
THE HIDDEN POWER OF
UNIVERSAL LAWS
Contents
Introduction 2
Chapter - 1 3
The Law of Attraction 3
Chapter 2 4
Your Thoughts Control You 4
Chapter 3 5
Visualize Your Thoughts 5
Chapter 4 5
The Law of Vibration 5
Chapter 5 5
Chapter 6 5
Understanding Karma 5
Chapter 7 6
Chapter 8 7
The Law of Love 7
Chapter 9 7
The Law of Allowing 7
Chapter 10 7
Summary 7
Introduction
In life, there are universal laws that govern everything we do. These laws are so perfect that if you were to align yourself with them, you could have so much prosperity that it would be coming out of your ears. This is because God created the universe in the image and likeness of him. It is failure to follow the universal laws that causes one to fail. The laws that were created consisted of the following: ·
Law of Gratitude: The Law of Gratitude states that you must show gratitude for what you have. By having gratitude, you speed your growth and success faster than you normally would. This is because if you appreciate the things you have, even if they are small things, you are open to receiving more.
Law of Attraction: The Law of Attraction states that if you focus your attention on something long enough you will get it. It all starts in the mind. You think of something and when you think of it, you manifest that in your life. This could be a mental picture of a check or actual cash, but you think about it with an image.
Law of Karma: the Law of Karma states that if you go out and do something bad, it will come back to you with something bad. If you do well for others, good things happen to you. The principle here is to know you can create good or bad through your actions. There will always be an effect no matter what.
Law of Love: the Law of Love states that love is more than emotion or feeling; it is energy. It has substance and can be felt. Love is also considered acceptance of oneself or others. This means that no matter what you do in life if you do not approach or leave the situation out of love, it won't work.
Law of Allowing: The Law of Allowing states that for us to get what we want, we must be receptive to it. We can't merely say to the Universe that we want something if we don't allow ourselves to receive it. This will defeat our purpose for wanting it in the first place.
Law of Vibration: the Law of Vibration states that if you wish on something and use your thoughts to visualize it, you are halfway there to get it. To complete the cycle you must use the Law of Vibration to feel part of what you want. Do this and you'll have anything you want in life.
For everything to function properly there has to be structure. Without structure, our world, or universe, would be in utter chaos. Successful people understand universal laws and apply them daily. They may not acknowledge that to you, but they do follow the laws. There is a higher power and this higher power controls the universe and what we get out of it. People who know this, but wish to direct their own lives, follow
THE HIDDEN POWER OF
UNIVERSAL LAWS
Contents
Introduction 2
Chapter - 1 3
The Law of Attraction 3
Chapter 2 4
Your Thoughts Control You 4
Chapter 3 5
Visualize Your Thoughts 5
Chapter 4 5
The Law of Vibration 5
Chapter 5 5
Chapter 6 5
Understanding Karma 5
Chapter 7 6
Chapter 8 7
The Law of Love 7
Chapter 9 7
The Law of Allowing 7
Chapter 10 7
Summary 7
Introduction
In life, there are universal laws that govern everything we do. These laws are so perfect that if you were to align yourself with them, you could have so much prosperity that it would be coming out of your ears. This is because God created the universe in the image and likeness of him. It is failure to follow the universal laws that causes one to fail. The laws that were created consisted of the following: ·
Law of Gratitude: The Law of Gratitude states that you must show gratitude for what you have. By having gratitude, you speed your growth and success faster than you normally would. This is because if you appreciate the things you have, even if they are small things, you are open to receiving more.
Law of Attraction: The Law of Attraction states that if you focus your attention on something long enough you will get it. It all starts in the mind. You think of something and when you think of it, you manifest that in your life. This could be a mental picture of a check or actual cash, but you think about it with an image.
Law of Karma: the Law of Karma states that if you go out and do something bad, it will come back to you with something bad. If you do well for others, good things happen to you. The principle here is to know you can create good or bad through your actions. There will always be an effect no matter what.
Law of Love: the Law of Love states that love is more than emotion or feeling; it is energy. It has substance and can be felt. Love is also considered acceptance of oneself or others. This means that no matter what you do in life if you do not approach or leave the situation out of love, it won't work.
Law of Allowing: The Law of Allowing states that for us to get what we want, we must be receptive to it. We can't merely say to the Universe that we want something if we don't allow ourselves to receive it. This will defeat our purpose for wanting it in the first place.
Law of Vibration: the Law of Vibration states that if you wish on something and use your thoughts to visualize it, you are halfway there to get it. To complete the cycle you must use the Law of Vibration to feel part of what you want. Do this and you'll have anything you want in life.
For everything to function properly there has to be structure. Without structure, our world, or universe, would be in utter chaos. Successful people understand universal laws and apply them daily. They may not acknowledge that to you, but they do follow the laws. There is a higher power and this higher power controls the universe and what we get out of it. People who know this, but wish to direct their own lives, follow
Types of Life Insurance Policies Available in IndiaMyMoneyMantra
Life Insurance policy- Different types of life insurance Plans explained like Risk, Benefits of Term Plan, Whole life Plan, Endowment Plan, ULIP Plans, Money Back Policy, Child Policy & Annuity Plan available in India.
Life Insurance is a form of risk management primarily used to transfer the risk of uncertain loss.
It provides compensation for financial loss only not profit.
Life insurance is a protection against the RISK of financial loss that would result from the premature death of an insured. The named beneficiary receives the proceeds and is thereby safeguarded from the financial impact of the death of the insured. The death benefit is paid by a life insurer in consideration of premium payments made by the insured.
MKT 3063 Personal SellingDr. Thomas F. CannonCase Study #2.docxannandleola
MKT 3063 Personal Selling
Dr. Thomas F. Cannon
Case Study #2 (5.0)
“What Makes Him So Successful?”
____________________________________________________
Dan Clover met with several customers during his day of selling. Your answers must demonstrate your understanding of why Dan acted in the manner he did during the rapport stage of selling.
Read the case study carefully for clues and support each of your answers with specific information or logical assumptions based on information.
1. Customers: (1.25) Center-city drug store pharmacy operated by afather and son:
· Why did Dan take off his suit jacket and rolled up his sleeves? (0.625)
· What is the significance of a salesperson (such as Dan or Wanda) noticing the wall hangings and coffee table magazines? (0.625)
2. Customer: (1.25) Dr. Stanley Hafer who works at a suburban hospital:
· In sales term/jargon, Nurse Ruth Blair is considered what? (0.625)
· What role, if any, does Nurse Ruth Blair have in the buying decision? (0.625)
3. Customer: (1.25) Dr. Beverly Pruett who operates a private medical clinic:
· Why did Dan wait for Dr. Pruett to sit before seating himself? (0.625)
· Dan did not engage in rapport building based on his assumption of Dr. Pruett’s communication style which he most likely thinks is what? (0.625)
4. Rapport Stage: (1.25) Effective rapport building creates a level of comfort between a
prospect/customer and the sales person. Complete the following sentence about the value of
rapport building.
As in any relationship, comfort builds ______ which will lead to a long-term _________________.
Submission Format:
· One cover sheet (See Blackboard)
· Arial font, 11 or 12 point
· Print this answer sheet front/back if necessary and if possible
· Staple all pages together
FIN 3660
Assignment Chapters 5-6 Name:
1. Briefly discuss the three most important characteristics of term life insurance
a.
b.
c.
2. Please define each of the following and provide one scenario in which each plan or type of coverage would be appropriate.
(a) Estate plan:
(b) A key person insurance plan:
(c) Credit life insurance:
(d) A business continuation insurance plan:
(e) A buy-sell agreement:
3. Please describe the key features of each of the following types of policies:
(a) An endowment insurance policy:
(b) Variable life policy:
(c) Universal life policy:
4. Describe the differences between a last survivor life insurance policy and a joint whole life insurance policy.
5. Rebecca Dee is the policy owner-insured of a life insurance policy that names her 27-year-old son, Eli, as the beneficiary. If Ms. Dee dies while the policy is in force and while Eli is still alive, then the death benefit of the policy
a. Will be payable to whom? _______
b. Will or will not (mark the correct answer) be taxable income to the recipient.
On the remaining questions, please indicate the CORRECT statement and explain why the other three statements are not correct:
6. Emmanuel L ...
Accident Up Ahead!Listen to this text being read aloud by a hu.docxmehek4
Accident Up Ahead!
Listen to this text being read aloud by a human being by clicking on this link.
Answer questions #1 and #2 and then answer #3 or #4.
1. When an accident or disaster occurs, many people will panic or just stand there looking. Why do they react that way? (Answer using a short paragraph.)
2. What fears and doubts does Jody have to overcome as she works? What helps her to keep going? (Answer using two short paragraphs.)
3. Write a paragraph about an accident that you experienced as a victim, an observer, or the person who helped the victim.
or
4. As one of the Fortins or Jodouins, write a letter to Jody Stevens thanking her for what she did.
Accident Up Ahead!
JANICE TYRWHITT
THE NORTHBOUND BUS had scarcely left North Bay, Ontario, when-at 1:30 a.m. on Saturday, October 11, 1975-it came to an abrupt halt. Peering out the bus window at Highway 11, Jody Stevens saw a line of taillights stretching into the night. "There must be an accident up ahead," she said to her seatmate. "I had better get out and help." Jody, a young nurse from Toronto, was on her way home to spend Thanksgiving (and celebrate her twenty-fourth birthday) with her family in Timmins. An October drizzle soaked her shoulders as she trudged past a quarter mile of stopped traffic to an eerie scene. In the flickering light of Coleman lamps and road flares, she saw the two-lane highway spattered with blood. An old school bus converted into a camper lay on its side in the ditch. A hunter's pickup truck was stalled in the left lane, the bodies of two moose lolling grotesquely from the back. Off the right shoulder was a silver Mercedes-Benz with a smashed hood. In the lane between them a silent ring of people had gathered round a fourth vehicle-a blue 1973 Ford, a crumpled wreck, with four people in it.
"I think they're all dead," a burly man told Jody.
She caught her breath and thought, Well, Stevens, what do you do now? Jody had packed a lot of experience into the two years since her graduation as a registered nurse, most recently at the Toronto East General Hospital. She threw off her corduroy coat and crawled into the back seat of the crushed car.
While Jody was riding north, twenty-six-year-old Charles Jodouin, his wife Jeanne, and her parents Omer and Lucie Fortin, were driving south from Timmins to visit Jeanne's sister in Kingston. Despite the late hour, traffic in both directions was fairly heavy. They were less than three miles out of North Bay when, suddenly, the left rear wheel spun off an oncoming converted school bus: it flew straight into the grill of a pickup truck moving south just ahead of the Jodouins. Then, out of control, the camperbus skidded across the centre line and sideswiped the Jodouins' blue Ford. A split second later a brand-new Mercedes, travelling behind the camper, also slammed into the Jodouins.
Scrambling into the wrecked blue Ford, Jody found herself in a welter of blood and splintered glass. Trapped in the driver's se.
Access the annual report provided in Course Materials to complete .docxmehek4
Access
the annual report provided in Course Materials to complete the Financial Reporting Problem, Part 1 assignment due in Week Six.
Analyze
the information contained in the company’s balance sheet and income statement to answer the following questions:
·
Are the assets included under the company’s current assets listed in the proper order? Explain your answer.
·
How are the company’s assets classified?
·
What are cash equivalents?
·
What are the company’s total current liabilities at the end of its most recent annual reporting period?
·
What are the company’s total current liabilities at the end of the previous annual reporting period?
·
Considering all the information you have gathered, why might this information be important to potential creditors, investors, and employees?
Create a table to summarize any dollar value answers. Then Summarize
the analysis in a 700- to 1,050-word paper in a Microsoft
®
Word document.
Format
your paper and presentation consistent with APA guidelines.
.
More Related Content
Similar to Term Life InsuranceLife and Health Insurance FIN 3660Chapte.docx
Types of Life Insurance Policies Available in IndiaMyMoneyMantra
Life Insurance policy- Different types of life insurance Plans explained like Risk, Benefits of Term Plan, Whole life Plan, Endowment Plan, ULIP Plans, Money Back Policy, Child Policy & Annuity Plan available in India.
Life Insurance is a form of risk management primarily used to transfer the risk of uncertain loss.
It provides compensation for financial loss only not profit.
Life insurance is a protection against the RISK of financial loss that would result from the premature death of an insured. The named beneficiary receives the proceeds and is thereby safeguarded from the financial impact of the death of the insured. The death benefit is paid by a life insurer in consideration of premium payments made by the insured.
MKT 3063 Personal SellingDr. Thomas F. CannonCase Study #2.docxannandleola
MKT 3063 Personal Selling
Dr. Thomas F. Cannon
Case Study #2 (5.0)
“What Makes Him So Successful?”
____________________________________________________
Dan Clover met with several customers during his day of selling. Your answers must demonstrate your understanding of why Dan acted in the manner he did during the rapport stage of selling.
Read the case study carefully for clues and support each of your answers with specific information or logical assumptions based on information.
1. Customers: (1.25) Center-city drug store pharmacy operated by afather and son:
· Why did Dan take off his suit jacket and rolled up his sleeves? (0.625)
· What is the significance of a salesperson (such as Dan or Wanda) noticing the wall hangings and coffee table magazines? (0.625)
2. Customer: (1.25) Dr. Stanley Hafer who works at a suburban hospital:
· In sales term/jargon, Nurse Ruth Blair is considered what? (0.625)
· What role, if any, does Nurse Ruth Blair have in the buying decision? (0.625)
3. Customer: (1.25) Dr. Beverly Pruett who operates a private medical clinic:
· Why did Dan wait for Dr. Pruett to sit before seating himself? (0.625)
· Dan did not engage in rapport building based on his assumption of Dr. Pruett’s communication style which he most likely thinks is what? (0.625)
4. Rapport Stage: (1.25) Effective rapport building creates a level of comfort between a
prospect/customer and the sales person. Complete the following sentence about the value of
rapport building.
As in any relationship, comfort builds ______ which will lead to a long-term _________________.
Submission Format:
· One cover sheet (See Blackboard)
· Arial font, 11 or 12 point
· Print this answer sheet front/back if necessary and if possible
· Staple all pages together
FIN 3660
Assignment Chapters 5-6 Name:
1. Briefly discuss the three most important characteristics of term life insurance
a.
b.
c.
2. Please define each of the following and provide one scenario in which each plan or type of coverage would be appropriate.
(a) Estate plan:
(b) A key person insurance plan:
(c) Credit life insurance:
(d) A business continuation insurance plan:
(e) A buy-sell agreement:
3. Please describe the key features of each of the following types of policies:
(a) An endowment insurance policy:
(b) Variable life policy:
(c) Universal life policy:
4. Describe the differences between a last survivor life insurance policy and a joint whole life insurance policy.
5. Rebecca Dee is the policy owner-insured of a life insurance policy that names her 27-year-old son, Eli, as the beneficiary. If Ms. Dee dies while the policy is in force and while Eli is still alive, then the death benefit of the policy
a. Will be payable to whom? _______
b. Will or will not (mark the correct answer) be taxable income to the recipient.
On the remaining questions, please indicate the CORRECT statement and explain why the other three statements are not correct:
6. Emmanuel L ...
Accident Up Ahead!Listen to this text being read aloud by a hu.docxmehek4
Accident Up Ahead!
Listen to this text being read aloud by a human being by clicking on this link.
Answer questions #1 and #2 and then answer #3 or #4.
1. When an accident or disaster occurs, many people will panic or just stand there looking. Why do they react that way? (Answer using a short paragraph.)
2. What fears and doubts does Jody have to overcome as she works? What helps her to keep going? (Answer using two short paragraphs.)
3. Write a paragraph about an accident that you experienced as a victim, an observer, or the person who helped the victim.
or
4. As one of the Fortins or Jodouins, write a letter to Jody Stevens thanking her for what she did.
Accident Up Ahead!
JANICE TYRWHITT
THE NORTHBOUND BUS had scarcely left North Bay, Ontario, when-at 1:30 a.m. on Saturday, October 11, 1975-it came to an abrupt halt. Peering out the bus window at Highway 11, Jody Stevens saw a line of taillights stretching into the night. "There must be an accident up ahead," she said to her seatmate. "I had better get out and help." Jody, a young nurse from Toronto, was on her way home to spend Thanksgiving (and celebrate her twenty-fourth birthday) with her family in Timmins. An October drizzle soaked her shoulders as she trudged past a quarter mile of stopped traffic to an eerie scene. In the flickering light of Coleman lamps and road flares, she saw the two-lane highway spattered with blood. An old school bus converted into a camper lay on its side in the ditch. A hunter's pickup truck was stalled in the left lane, the bodies of two moose lolling grotesquely from the back. Off the right shoulder was a silver Mercedes-Benz with a smashed hood. In the lane between them a silent ring of people had gathered round a fourth vehicle-a blue 1973 Ford, a crumpled wreck, with four people in it.
"I think they're all dead," a burly man told Jody.
She caught her breath and thought, Well, Stevens, what do you do now? Jody had packed a lot of experience into the two years since her graduation as a registered nurse, most recently at the Toronto East General Hospital. She threw off her corduroy coat and crawled into the back seat of the crushed car.
While Jody was riding north, twenty-six-year-old Charles Jodouin, his wife Jeanne, and her parents Omer and Lucie Fortin, were driving south from Timmins to visit Jeanne's sister in Kingston. Despite the late hour, traffic in both directions was fairly heavy. They were less than three miles out of North Bay when, suddenly, the left rear wheel spun off an oncoming converted school bus: it flew straight into the grill of a pickup truck moving south just ahead of the Jodouins. Then, out of control, the camperbus skidded across the centre line and sideswiped the Jodouins' blue Ford. A split second later a brand-new Mercedes, travelling behind the camper, also slammed into the Jodouins.
Scrambling into the wrecked blue Ford, Jody found herself in a welter of blood and splintered glass. Trapped in the driver's se.
Access the annual report provided in Course Materials to complete .docxmehek4
Access
the annual report provided in Course Materials to complete the Financial Reporting Problem, Part 1 assignment due in Week Six.
Analyze
the information contained in the company’s balance sheet and income statement to answer the following questions:
·
Are the assets included under the company’s current assets listed in the proper order? Explain your answer.
·
How are the company’s assets classified?
·
What are cash equivalents?
·
What are the company’s total current liabilities at the end of its most recent annual reporting period?
·
What are the company’s total current liabilities at the end of the previous annual reporting period?
·
Considering all the information you have gathered, why might this information be important to potential creditors, investors, and employees?
Create a table to summarize any dollar value answers. Then Summarize
the analysis in a 700- to 1,050-word paper in a Microsoft
®
Word document.
Format
your paper and presentation consistent with APA guidelines.
.
Access the Internet to acquire a copy of the most recent annual re.docxmehek4
Access
the Internet to acquire a copy of the most recent annual report for the publicly traded company used to complete the Financial Reporting Problem, Part 1 assignment due in Week Six. (In week six, I wrote about Apple’s financial report)
Analyze
the information contained in the company’s balance sheet and income statement to answer the following questions:
·
Are the assets included under the company’s current assets listed in the proper order? Explain your answer.
·
How are the company’s assets classified?
·
What are cash equivalents?
·
What are the company’s total current liabilities at the end of its most recent annual reporting period?
·
What are the company’s total current liabilities at the end of the previous annual reporting period?
·
Considering all the information you have gathered, why might this information be important to potential creditors, investors, and employees?
Summarize
the analysis in a 700- to 1,050-word paper in a Microsoft® Word document.
Include
a copy of the company’s balance sheet and income statement.
Format
your paper and presentation consistent with APA guidelines.
.
Acc 290 Final Exam MCQs) Which financial statement is used to de.docxmehek4
Acc 290 Final Exam MCQs
) Which financial statement is used to determine cash generated from operations?
A. Income statement
B. Statement of operations
C. Statement of cash flows
D. Retained earnings statement
2) In terms of sequence, in what order must the four basic financial statements be prepared?
A. Balance sheet, income statement, statement of cash flows, and capital statement
B. Income statement, capital statement, statement of cash flows, and balance sheet
C. Balance sheet, capital statement, statement of cash flows, and income statement
D. Income statement, capital statement, balance sheet, and statement of cash flows
3. In classifying transactions, which of the following is true in regard to assets?
A. Normal balances and increases are debits
B. Normal balances and decreases are credits
C. Normal balances can either be debits or credits for assets
D. Normal balances are debits and increases can be debits or credits
4. An increase in an expense account must be
A. debited
B. credited
C. either debited or credited, depending on the circumstances
D. capitalized
5. ABC Corporation issues 100 shares of $1 par common stock at $5 per share, which of the following is the correct journal entry?
C. Correct ANSWER (Go with this Option)
6. In the first month of operations, the total of the debit entries to the cash account amounted to $1,400 and the total of the credit entries to the cash account amounted to $600. The cash account has a
A. $600 credit balance
B. $1,400 debit balance
C. $800 debit balance
D. $800 credit balance
7. Which ledger contains control accounts?
A. Accounts receivable subsidiary ledger
B. General ledger
C. Accounts payable subsidiary ledger
D. General revenue and expense ledger
8. Smith is a customer of ABC Corporation. Smith typically purchases merchandise from ABC on account. Which ledger would ABC use to keep track of the details of Smith’s account?
A. Accounts receivable subsidiary ledger
B. Accounts receivable control ledger
C. General ledger
D. Accounts payable subsidiary ledger
9. Under the cash basis of accounting
A. revenue is recognized when services are performed
B. expenses are matched with the revenue that is produced
C. cash must be received before revenue is recognized
D. a promise to pay is sufficient to recognize revenue
10. Under the accrual basis of accounting
A. cash must be received before revenue is recognized
B. net income is calculated by matching cash outflows against cash inflows
C. events that change a company’s financial statements are recognized in the period they occur rather than in the period in which the cash is paid or received
D. the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles
11. The Vintage Laundry Company purchased $6,500 worth of laundry supplies on June 2 and.
AC2760
Week 2 Assignment
Read the following scenario, and complete the form on the following worksheet:
On March 1, 2012, Mitch Quade established Mitch Realty, which completed the following transactions during the month:
(a)
Mitch Quade transferred cash from a personal bank account to an account to be used for the business in exchange for capital stock, $18,000.
(b)
Purchase supplies on account, $1,200.
(c)
Earned sales commission, receiving cash, $14,000.
(d)
Paid rent on office and equipment for the month, $2,800.
(e)
Paid creditor on account, $750.
(f)
Paid office salaries, $3,000.
Instructions:
1
Journalize entries for transactions (a) through (f).
Omit the journal entry explanations. Please use the drop-down list (right of the cell) to enter the account description box on the worksheet.
2
Post the journal entries the T accounts, placing the appropriate letter to the left of each amount to identify the transactions.
Determine the account balance after all posting is complete.
Accounts containing only a single entry do not need a balance.
3
Prepare and unadjusted trial balance as of March 31, 2012.
1.
Journal - Mitch Realty
Description
Debit
Credit
(a)
(b)
(c)
(d)
(e)
(f)
2.
Ledger - Mitch Realty
Cash
Capital Stock
(a)
(d)
(a)
(c)
(e)
(f)
Sales Commission
Bal.
(c)
Supplies
Office Salaries Expense
(b)
(f)
Accounts Payable
Rent Expense
(e)
(b)
(d)
Bal.
3.
MITCH REALTY
Unadjusted Trial Balance
March 31, 2012
Debit
Credit
Cash
Supplies
Accounts Payable
Capital Stock
Sales Commissions
Rent Expense
Office Salaries Expense
-
-
.
AC1220 Lab 5.1IntroductionJake determines that owning the .docxmehek4
AC1220 Lab 5.1
Introduction
Jake determines that owning the building where Jake’s Computer Sales and Repair operates makes more sense than leasing the facility. On June 1, 20x1, Jake exchanges a $180,000 note payable for the following fixed assets:
·
Land
·
Land improvements, including fencing, paving, lighting, and signage
·
Building
Jake hires an independent appraiser who assigns the following market values to the assets:
Asset
Fair Market Value
Land
$23,500
Land improvements
$8,000
Building
$164,500
Requirement 1
Jake must allocate the $195,000 among three asset classes: land, land improvements, and building.
a. Compute the total fair market value (FMV) of the lump-sum purchase of assets.
Asset
Fair Market Value
Land
$23,500
Land improvements
8,000
Building
164,000
Total
b. Express land improvements and building as a percentage of the total FMV and allocate the purchase price of $180,000 to land improvements and building—the computation is completed for land.
Asset
Fair Market Value
% of Total Fair Market Value
Purchase Price
Cost of Asset
Land
$23,500
12%
$180,000
$21,600
Land improvements
180,000
Building
180,000
Total
c. Journalize the purchase of the assets, using the allocated costs computed in Requirement 1b.
Date
Account and Explanation
Debit
Credit
6/1/x1
To record purchase of land, land improvements, and building
Requirement 2
a. Classify each of the following spending items as either a capital expenditure or an expense. Indicate the correct choice with an “x”:
Spending
Capital Expenditure
Expense
Routine repairs to fencing, $120 (cash)
Renovation of building, including addition to warehouse, $15,000 (on account)
Resurfaced paving, extending the remaining useful life of the paving from 3 to 5 years, $1,000 (cash)
b. Journalize the expenditures described in Requirement 2a.
Date
Account and Explanation
Debit
Credit
6/1/x1
To record repairs to fencing
6/1/x1
To record renovation of building
6/1/x1
To record extraordinary repair
Requirement 3
a. Using the straight-line depreciation method, compute the depreciation expense and the accumulated depreciation that would be recorded at December 20x1. Completing the shaded cells in the following table:
Date
Asset Cost
Depreciable Cost
Straight-line Depreciation Rate
Depreciation Expense
Accumulated Depreciation
Book Value
Jun 1, 20x1
1/5 x 6/12
b. Using the double-declining balance method, compute the depreciation expense and the accumulated depreciation that would be recorded at December 20x1. Complete the shaded cells in the following table:
Date
Asset Cost
Depreciable Cost
Double-Declining Depreciation Rate
Depreciation Expense
Accumulated Depreciation
Book Value
Jun 1, 20x1
c. Assume that a truck is expected to be driven 7,000 miles through December 31, 20x1, and that each mile driven represents one production unit. Usi.
Abstract(Provide the main generalizable statement resulting .docxmehek4
Abstract
(
Provide the main generalizable
statement
resulting from the paper briefly)
Introduction
(Explain what the assignment is about to the reader briefly)
Anthropology definition
: according to Schaefer (2010) is “……………………………………………..” (p.5).
Interpretation: In your own words
Example: from your experiences
How does the discipline interface with sociology? Connect anthropology with sociology
Psychology definition
:
Interpretation:
Example:
How does it interface with sociology?
Political Science definition
:
Interpretation:
Example:
How does discipline interface with sociology?
Economics definition
:
Interpretation:
Example:
How does discipline interface with sociology?
Sociology definition
:
Interpretation:
Example:
How does discipline interface with sociology?
.
Abusive relationships are at the core of the Coetzee novel, whether .docxmehek4
Abusive relationships are at the core of the Coetzee novel, whether men and their abuse of women, individuals and their abuse of animals, and men and their abuse of other men. What does Coatzee want to convey to the reader about the nature of abuse and violence in relationships? How does he see both as emblematic of South Africa?
5 page paper on this topic above and include quotes or textual examples from the book.
.
Abraham, J., Sick, B., Anderson, J., Berg, A., Dehmer, C., & Tufano, A. (2011).
Selecting a provider: What factors influence patients' decision making?
Journal of Healthcare Management
,
56
(2), 99–114.
Chullen, C. L., Dunford, B. B., Angermeier, I., Boss, R. W., & Boss, A. D. (2011).
Minimizing deviant behavior in healthcare organizations: The effects of supportive leadership and job design
.
Journal of Healthcare Management
,
55
(6), 381–397.
Compare the two studies by analyzing their samples. Use the following questions to guide you.
What sampling design is used?
Is the sample size adequate?
How does the sample affect the validity of the conclusions of the study?
.
Abraham, J., Sick, B., Anderson, J., Berg, A., Dehmer, C., & Tufano, A. (2011).
Selecting a provider: What factors influence patients' decision making?
Journal of Healthcare Management
,
56
(2), 99–114.
·
Chullen, C. L., Dunford, B. B., Angermeier, I., Boss, R. W., & Boss, A. D. (2011).
Minimizing deviant behavior in healthcare organizations: The effects of supportive leadership and job design
.
Journal of Healthcare Management
,
55
(6), 381–397.
Compare the two studies by analyzing their samples. Use the following questions to guide you.
1.
What sampling design is used?
2.
Is the sample size adequate?
.
A.Da la correcta conjugación para cada oración.(Give the corre.docxmehek4
A.
Da la correcta conjugación para cada oración.
(Give the correct verb conjugation in F
ormal Commandfor each sentence)
.
Top of Form
1.
_______________
Ud. la cama. (hacer)
2.
______________ Uds. la mesa. (poner)
3.
______________
Ud. a tiempo. (salir)
4.
_____________
Uds. a la fiesta. (venir)
5.
_____________ Ud. la verdad. (decir)
6.
______________ Uds. a la fiesta. (ir)
7.
______________Ud. bueno. (ser)
8.
______________ Uds. la información. (saber)
9.
______________ Ud. en la clase a tiempo.
(estar)
10.
______________ Uds. respecto a sus profesores.
(dar)
11.
______________ Ud. a clase. (ir)
12.
______________ Uds. buenos. (ser)
13.
______________
Ud. el libro en la mochila. (poner)
14.
______________ Uds. de la casa a las ocho.
(salir)
15.
______________
Ud. a mi casa. (venir)
Bottom of Form
.
Abraham Lincoln is considered by many historians to be the greatest .docxmehek4
Abraham Lincoln is considered by many historians to be the greatest American President. His drive to end slavery and to unify the nation was at great personal cost. For this assignment, you will access two important primary sources authored by Abraham Lincoln.
Using the Internet, review the following primary source document:
[Lincoln, A.?]. [ca. 1863].
The Emancipation Proclamation
. Archived document, U.S. National Archives & Records Administration. Retrieved from
http://www.archives.gov/exhibits/featured_documents/
emancipation_proclamation/transcript.html
In addition, research the Internet for
The Gettysburg Address.
The
Webliography
for this module contains a link to this resource.
Based on your analysis of all the readings for this module, respond to the following:
What is Lincoln’s perception of liberty and equality?
Why did he place so much importance on the destruction of slavery and the continuation of one nation?
What examples from both documents demonstrate both civil liberties and rights?
Support your statements with appropriate scholarly references.
Write your initial response in a minimum of 300 words. Apply APA standards to citation of sources.
.
About half of the paid lobbyists in Washington are former government.docxmehek4
About half of the paid lobbyists in Washington are former government staff members or former members of Congress. Why would interest groups employ such people? Why might some reformers want to limit the ability of interest groups to employ them? On what basis might an interest group argue that such limits are unconstitutional?
.
ABC sells 400 shares of its $23 par common stock for $27. The entry .docxmehek4
ABC sells 400 shares of its $23 par common stock for $27. The entry would entail credit(s. to __________.
A. Cash for $9,200
B. Paid-in Capital in Excess of Par-Common for $800; Common Stock for $10,800
C. Paid-in Capital in Excess of Par-Common for $1,600; Common Stock for $9,200
D. Common Stock for $10,800
.
ABC company is increasing its equity by selling additional shares to.docxmehek4
ABC company is increasing its equity by selling additional shares to the public and also by converting its retained earnings. The total amount to be raised is $1,000. Given that the size of retained earnings is $300, how much should be raised externally (by issuing new shares)?
a) $700 b) $705 c) $1,000 d) $1,005 e) $300
.
A.The unification of previously fractious and divided Arab tribes.docxmehek4
A.
The unification of previously fractious and divided Arab tribes
B.
The capitulation of Jewish and Christian leaders
C.
Direct military assistance from the Sasanid state
D.
The exhaustion of the Byzantine Empire after Pyrrhic victories over the Ostrogoths and Vandals
.
A.Escribe la forma correcta del verbo en españolNosotros siem.docxmehek4
A. Escribe la forma correcta del verbo en español
Nosotros siempre_____________coca cola con la pizza. (drink)
Tú ________________________________ en Buenos Aires. (live)
Ellos ______________________________el pastel. (divide)
Yo _________________________la comida mexicana. (eat)
Paco ________________________el dinero en la caja. (hides)
Vosotros __________________________estudiar. (should)
Ramón y Carlos _______________________en el parque. (run)
La maestra __________________________ la puerta. (opens)
Yo _______________________el cuatro de Pedro. (describe)
Él _________________________el carro. (sells)
Tú ___________________un regalo para tu cumpleaños. (receive)
Los estudiantes______________________el libro. (read)
Vosotros ________________________a la clase de arte. (attend)
Ella ___________________________hacer la tarea. (promises)
Alejandra y yo ___________________a hablar español. (learn)
El hombre ____________________descubre el tesoro. (discovers)
Uds. ________________________las escaleras. (go up, climb)
Ud. ________________________el examen. (cover)
El niño _________________________la ventana. (breaks)
Las mujeres_________________________en Dios. (believe)
Escribe en español
We drink milk. _________________________________________
He breaks the window.____________________________________
They open the door.______________________________________
You (pl. Spain) promise to write.____________________________
I learn to speak Spanish.___________________________________
Contesta las preguntas
¿Dónde vives?____________________________________________
¿Lees muchos libros?______________________________________
¿Comes mucha comida mexicana?____________________________
¿Debes estudiar todos los días?_______________________________
¿Recibes buenas notas en todas tus clases?______________________
.
A.Both countries fought for independence from Great Britain, b.docxmehek4
A
.
Both countries fought for independence from Great Britain, but the United States won, and China did not.
B
.
Both countries were colonized, but the United States went on to become a major imperial power, and China did not.
C
.
Both countries established colonies in India, but the United States established commercial control, and China did not.
D
.
Both countries established colonies in the Caribbean, but the United States’ colonies rebelled, and China’s did not.
.
a.A patent purchased from J. Miller on January 1, 2010, for a ca.docxmehek4
a.
A patent purchased from J. Miller on January 1, 2010, for a cash cost of $5,640. When purchased, the patent had an estimated life of fifteen years.
b.
A trademark was registered with the federal government for $10,000. Management estimated that the trademark could be worth as much as $200,000 because it has an indefinite life.
c.
Computer licensing rights were purchased on January 1, 2010, for $60,000. The rights are expected to have a four-year useful life to the company.
Compute the acquisition cost of each intangible asset.
patent
trademark
licensing rights
.
A.) Imagine that astronomers have discovered intelligent life in a n.docxmehek4
A.) Imagine that astronomers have discovered intelligent life in a nearby star system. Imagine you are part of a group submitting a proposal for who on Earth should speak for the planet and what 50-word message should be conveyed. Be sure to answer all three questions below, if you choose this option.
(A) Who should speak for Earth and why?
(B) What should this person say in 50 words?
(C) Why is this message the most important compared to other things that could be said?
Instructions: should be at least 200 words.
B.) Observing Jupiter’s Moons
Big Idea: Sky objects have properties, locations, and predictable patterns of movements that can be observed and described.
Goal: Students will conduct a series of inquiries about the position and motion of Jupiter’s moons using prescribed Internet simulations.
Computer Setup:
Access http://space.jpl.nasa.gov/ and
a) Select THE MOON in the “Show me _______ “ drop down menu
b) Select THE SUN in the “as seen from _______ “ drop down menu
c) Select the radio button “I want a field of view of ____ degrees” and set the drop down menu to 0.5
d) Select the check box for EXTRA BRIGHTNESS and then Select “Run Simulator”
Phase I: Exploration
1) The resulting image shows what one would see looking through a special telescope. In this picture, where is the observer with the special telescope located?
2) How does the image change if you INCREASE the field of view?
3) What is the exact date of the image?
4) Astronomers typically mark images based on the time it currently is in Greenwich, England, called UTC. What is the precise time of the image?
5) Using a ruler to measure the distance on the screen between the middle of Earth and the middle of the Moon, what is the measured distance? You do NOT need to know the exact number of kilometers, but simply a ruler-measurement you can compare other measurements you make later. Alternately, you can use the edge of a blank piece of paper held in the landscape orientation and mark the positions of Earth and Moon or the Squidgit ruler found on the last page.
6) Use the browser’s BACK button to return to the Solar System Simulator homepage. Now, advance the time by 1 hour and determine the new distance between the Earth and Moon.
7) Use the browser’s BACK button to return to the Solar System Simulator homepage. Now, advance the time by one day from when you started and determine the new distance between the Earth and Moon.
8) Use the browser’s BACK button to return to the Solar System Simulator homepage. Now, advance the time by three days from when you started and determine the new distance between the Earth and Moon.
9) Use the browser’s BACK button to return to the Solar System Simulator homepage. Now, advance the time by five days from when you started and determine the new distance between the Earth and Moon.
10) Use the browser’s BACK button to return to the Solar System Simulator homepage. Now, advance the time by 10 days from when you s.
Acetabularia Information For Class 9 .docxvaibhavrinwa19
Acetabularia acetabulum is a single-celled green alga that in its vegetative state is morphologically differentiated into a basal rhizoid and an axially elongated stalk, which bears whorls of branching hairs. The single diploid nucleus resides in the rhizoid.
Introduction to AI for Nonprofits with Tapp NetworkTechSoup
Dive into the world of AI! Experts Jon Hill and Tareq Monaur will guide you through AI's role in enhancing nonprofit websites and basic marketing strategies, making it easy to understand and apply.
Francesca Gottschalk - How can education support child empowerment.pptxEduSkills OECD
Francesca Gottschalk from the OECD’s Centre for Educational Research and Innovation presents at the Ask an Expert Webinar: How can education support child empowerment?
Biological screening of herbal drugs: Introduction and Need for
Phyto-Pharmacological Screening, New Strategies for evaluating
Natural Products, In vitro evaluation techniques for Antioxidants, Antimicrobial and Anticancer drugs. In vivo evaluation techniques
for Anti-inflammatory, Antiulcer, Anticancer, Wound healing, Antidiabetic, Hepatoprotective, Cardio protective, Diuretics and
Antifertility, Toxicity studies as per OECD guidelines
A Strategic Approach: GenAI in EducationPeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
Embracing GenAI - A Strategic ImperativePeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
Palestine last event orientationfvgnh .pptxRaedMohamed3
An EFL lesson about the current events in Palestine. It is intended to be for intermediate students who wish to increase their listening skills through a short lesson in power point.
Welcome to TechSoup New Member Orientation and Q&A (May 2024).pdfTechSoup
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Term Life InsuranceLife and Health Insurance FIN 3660Chapte.docx
1. Term Life Insurance
Life and Health Insurance FIN 3660
Chapter 5
Outline
Needs Met by Life Insurance
Personal Needs
Business Needs
Term Life Insurance
Characteristics of Term Life Insurance Products
Plans of Term Life Insurance Coverage
Features of Term Life Insurance Policies
2
Needs Met by Life Insurance
Personal Needs
Most common personal needs that life insurance can meet are:
Dependents’ support
Estate planning
Paying debts and final expenses
3
Dependents Support
Life insurance can provide funds to support the family members
of a deceased loved one until they obtain new methods of
support or until they adjust to living on a lower income.
The proceeds can also be used to supplement the family’s
income.
In many jurisdictions, the beneficiary of a lump sum of money
2. after the death of a loved one is usually not taxed on the money
they receive.
4
Estate Planning
Estate- the accumulated assets an individual owns when he/she
dies.
Will- a legal document that directs how the individual’s
property is to be distributed after his death.
The executor is the person who is a personal representative of
the person who has died with a valid will. (administrator if they
person died without a valid will)
Estate Plan- considers the amount of assets and debts that
he/she is likely to have when he/she dies and how best to
preserve those assets so that they can be distributed as she
desires.
Life insurance is an important part of the estate plan.
Can leave home to one child and life insurance policy to the
other.
5
Debts and Final Expenses
A person’s death generally does not extinguish his/her debts.
In some cases the deceased estate isn’t large enough to pay
his/her debts and final expenses.
If a life insurance policy is included in the estate plan, the
proceeds can help pay those remaining debts.
6
Business needs
Two reasons for a business to purchase life insurance:
To provide funds to ensure that the business continues in the
3. event of the death of an owner, partner, or other key person.
To provide benefits for its employees.
7
Business Continuation Insurance
An insurance plan designed to enable a business owner(s) to
provide for the business’ continued operation if the owner or a
key person dies.
Key Person Life Insurance- individual life insurance that a
business purchases on the life of a key person.
The business owner is the beneficiary of the insurance policy if
the person dies.
Buy-Sell Agreement- an agreement in which one party agrees to
purchase the financial interest that a second party has in a
business following the second party’s death and the second
party agrees to direct his estate to sell his interest in the
business to the purchasing party.
8
Characteristics of Term Life Insurance Products
Provides a death benefit only is the insured dies during the
period specified in the policy.
The length of the policy term varies considerably from one
policy to another.
Another common type of term life insurance cover the insured
until he/she reaches a specified age, usually 65 or 70.
Referred to as term to age___.
9
Level Term Life Insurance
Most common plan of term insurance.
AKA Level face amount term life insurance or guaranteed level
4. premium term insurance.
Provides a policy benefit that remains the same over the term of
the policy.
Amount of initial premium and each renewal premium payable
for a level term policy remains the same throughout the stated
policy term.
10
Decreasing Term Life Insurance
Provides a policy that decreases in amount over the term
coverage.
The amount of each renewal premium payable for a decreasing
term insurance policy usually remains level throughout the
policy term.
Three common plans of decreasing term insurance are mortgage
life insurance, credit life insurance, and family income
insurance.
11
Mortgage Life Insurance
A plan of decreasing term insurance designed to provide a
benefit amount that corresponds to the decreasing amount owed
on a mortgage loan.
The beneficiary is often a family member of the insured.
Joint Mortgage Life Insurance- provides the same benefit as a
mortgage life insurance except the join policy insures the lives
of two people.
12
Credit Life Insurance
A type of life insurance designed to pay the balance due on a
loan if the borrower dies before the loan is repaid.
5. Generally the loan must be a type of loan that can be repaid in
10 years or less
Premiums for credit life insurance may be level over the
duration of the loan or, in cases in which the amount of the loan
varies, may increase or decrease as the amount of the
outstanding loan balance increases or decreases
13
Family Income Coverage
A plan of decreasing term life insurance that provides to the
beneficiary a stated monthly income benefit amount if the
insured dies during the term of coverage.
A form of decreasing term life insurance
Most commonly purchased as a policy rider to a cash value life
insurance policy.
Policy Rider is an amendment to an insurance policy that
becomes apart of the insurance contract and either expands or
limits the benefits payable under the contract.
14
Increasing Term Life Insurance
Provides a death benefit that starts at one amount and increases
by some specified amount of percentage at stated intervals over
the policy term.
Often purchased as a rider to a life insurance policy and usually
is just for a limited time.
Premium generally increases as the amount of coverage
increases.
15
Renewable Term Insurance
6. A term life insurance policy that gives the policyowner the
option to continue the coverage at the end of the specified term
without presenting evidence of insurability (proof that the
insured person continues to be an insurable risk).
Renewal Provision- the provision in the policy that gives the
insured the right to continue coverage without presenting
evidence of insurability.
Most common limitations on renewals
The coverage may be renewed only until the insured attains a
stated age.
The coverage may be renewed only a stated maximum number
of times.
16
Convertible Term Insurance
Gives the policyowner the right to convert the term policy to a
cash value life insurance policy.
Conversion Privilege- allows the policyowner to change the
term insurance policy to a cash value policy without providing
evidence that the insured is an insurable risk.
Premium rate is higher when a term policy is converted into a
cash policy.
Attained age conversion- premium is based on insured’s age
Original age conversion- premium rate is based on insured’s age
when original term policy was issued
17
Return of Premium Term Insurance
A form of term life insurance that provides a death benefit if the
insured dies during the policy term and promises a return of
premiums if the insured does not die during the policy term.
18
7. Cash Value Life Insurance and
Endowment Insurance
Life and Health Insurance FIN 3660
Chapter 6
Cash value life insurance vs. whole life insurance
Cash value life insurance – (permanent life insurance) provides
life insurance coverage throughout the insured’s lifetime and
provides a savings element, known as cash value.
Provides protection for the entire lifetime of the insured
Provides both insurance coverage and a savings element that a
policyowner can use to meet financial needs during the
insured’s lifetime.
Whole life insurance – a type of cash value life insurance that
provides lifetime insurance coverage usually at a level premium
rate that does not increase as the insured ages.
Whole life – refers to the broad classification of insurance
products that are considered to be cash value insurance.
Also used to refer to a specific type of cash value insurance
product.
20
Whole Life Insurance
Policy loan – a loan a policyowner receives from an insurer
using the cash value of a life insurance policy as security.
Cash surrender value – the amount of the cash value that a
policyowner is entitled to receive upon surrender.
Premium Payment Periods
Continuous-premium whole life policy: premiums are payable
until the death of the insured.
Most whole life insurance policies sold today are continuous-
premium policies.
8. Also known as a straight life insurance policy or an ordinary
life insurance policy.
Limited-payment whole life policy: a whole life policy for
which premiums are payable only for a stated period of time or
until the insured’s death, whichever occurs first.
They are designed to meet a policyowner’s need for life
insurance coverage that continues throughout the insured’s
lifetime and that is funded over a limited time.
Paid-up policy – requires no further premium payments but
continues to provide coverage.
Single-premium whole life policy: a type of limited payment
policy that requires only one premium payment.
21
Whole Life Insurance
Modified Whole Life Insurance
Modified-premium whole life policy: a whole life policy for
which the annual premium amount changes after a specified
initial period (typically 5 or 10 years).
The face amount of a modified-premium policy remains level
throughout the life of the policy.
Graded-premium policies - whole life policies for which
premium payments are modified even more frequently.
Modified coverage policy: a whole life policy under which the
amount of insurance provided decreases by specific percentages
or amounts either when the insured reaches certain stated ages
or at the end of stated time periods.
The annual premium for a modified coverage whole life policy
is lower than for a continuous-premium whole life policy having
the same initial face amount.
22
Whole Life Insurance
9. Whole Life Insurance Covering More Than One Insured
Joint whole life insurance: same features and benefits as
individual whole life insurance, except that it insures two
people under the same policy.
Referred to as fist-to-die life insurance
Because coverage under a joint whole life policy ends once the
policy death benefit is paid, the surviving insured may be left
uninsured.
Last survivor life insurance: a variation of joint whole life
insurance under which the policy benefit is paid only after both
people insured by the policy have died.
Also known as second-to-die life insurance or survivorship life
insurance
Family Policies: a whole life insurance policy that includes term
life insurance coverage on the primary insured’s spouse and
children.
23
Universal Life Insurance
Universal Life (UL) Insurance – a form of cash value life
insurance that is characterized by its flexible premiums, its
flexible face amount and death benefit amount, and its
separation of the three primary policy elements.
Separation of Policy Elements
Mortality Charges: the amount needed to cover the risk the
insurer has assumed in issuing the policy.
“Cost of insurance”
Periodically deducted from a universal life insurance policy’s
cash value.
Interest Rate
Universal life insurance policy guarantees that the insurer will
pay at least a stated minimum interest rate on the policy’s cash
value each year.
Insurer will pay a higher interest rate if economic and
competitive conditions warrant.
10. Usually the insurer determines the current interest rate for
universal life policies based on the return that its own
investments are earning.
24
Universal Life Insurance
Separation of Policy Elements
Expenses
A flat charge during the first policy year to cover sales and
policy issue costs.
A percentage of each annual premium (such as 7 percent) to
cover expenses.
A monthly administration (management) fee, sometimes referred
to as a policy fee.
Surrender charges, which are specific charges imposed if the
owner surrenders the policy for its cash surrender value.
Specific charges for other services such as coverage changes or
policy withdrawals.
Operation of a Universal Life Insurance Policy
When an insurance company receives a universal life premium
payment, the insurer first deducts the amount of any applicable
expense charges. The insurer then credits the remainder of the
premium to the policy’s cash value.
The policyowner can increase the cash value of a universal life
policy by making additional or larger-than-required premium
payments.
If the cash value of any universal life policy is not sufficient to
pay the periodic mortality and expense charges, the policy will
lapse, unless the policyowner takes action to keep the policy in
force.
Lapse: the termination of a life insurance policy for nonpayment
of premium.
25
11. Universal Life Insurance
Flexibility Features
A universal life insurance policy gives the policyowner a great
deal of flexibility, both when he purchases the policy and over
the life of the policy.
Face Amount and Death Benefit: when a person buys a universal
life policy, he specifies the policy’s face amount and decides
whether the amount of the death benefit payable will remain
equal to the face amount (as with most traditional whole life
policies or will vary with changes in the policy’s cash value.
Premiums: a universal life policy may be either a flexible
premium policy or a fixed premium policy.
Flexible premium universal life insurance policy – allows the
policyowner to alter the amount and frequency of premium
payments, within specified limits.
Fixed premium iniversal life insurance policy – requires a series
of scheduled premium payments of a specified amount for a
specified length of time (typically 8 to 10 years) or until the
insured’s death, whichever comes first.
26
Universal Life Insurance
Periodic Reports
Generally include:
The amount of the death benefit payable
The amount of the policy’s cash value
The amount of the cash surrender value, if different from the
cash value
The amount of interest earned on the cash value
The amount of the mortality charges deducted
The amount of the expense charges deducted
The amount of premiums paid during the reporting period
The amount of policy loans outstanding
The amount of any cash value withdrawals
12. 27
Variable Life Insurance
Variable Life (VL) Insurance - a form of cash value life
insurance in which premiums are fixed, but the death benefit
and other values may vary, reflecting the performance of
investment subaccounts that the policyowner selects.
Subaccount: an undivided investment account in which an
insurer maintains funds that support its contractual obligations
to pay benefits under its guaranteed insurance products, such as
whole life insurance and other nonvariable products.
Separate account: (segregate account) an investment account the
insurer maintains separately from its general account to isolate
and help manage the funds placed in its variable products.
General account: an undivided investment account in which an
insurer maintains funds that support its contractual obligations
to pay benefits under its guaranteed insurance products, such as
whole life insurance and other nonvariable products.
28
Variable Universal Life Insurance
Variable Universal Life (VUL) Insurance – (flexible-premium
variable life insurance) combines the premium and death benefit
flexibility of universal life insurance with the investment
flexibility and risk of variable life insurance.
29
Endowment Insurance
Endowment Insurance – provides a policy benefit payable either
when the insured dies or on a stated date if the insured is still
alive on that date.
Maturity date: the date on which the insurer will pay the
13. policy’s face amount to the policyowner if the insured is still
living.
Reached either (1.) at the end of a stated term, such as 20 years,
or (2.) when the insured reaches a specified age.
30
Life and Health Insurance FIN 3660
Chapter 7
Supplemental Benefits
Objectives
Identify and describe three types of supplemental disability
benefits that life insurance policies may provide.
Explain the coverage that an accidental death benefit rider
provides and give examples of common exclusions.
Identify three types of accelerated death benefit riders and
describe the differences among those riders.
Describe three types of insurance riders that expand a life
insurance policy’s coverage to insure more than one individual.
Identify two types of insurability benefit riders and explain how
they allow a life insurance policyowner to purchase additional
insurance coverage.
32
The Basics
Supplemental benefits are benefits that can be added to
individual life insurance policies.
An additional premium amount is usually charged for each
benefit.
Sometimes supplemental benefits are provided by a policy
provision, but usually they are provided by adding riders to a
life insurance policy.
This helps when customizing a policy, because a new contract is
14. not needed to add coverage.
33
Supplemental Disability Benefits
Disability benefits can be added to a life insurance policy.
One of the most common supplemental benefits is the waiver of
premium for disability (WP) benefit.
Under this, the insurance waives its right to collect premiums
that become due while the insured is totally disabled. The
insurer pays the premiums, so a policy that builds a cash value
will continue to increase.
In participating policy the insurance company continues to pay
policy dividends as if the policyowner were paying premiums.
34
WP Benefits
The policyowner must notify the insurance company in writing
of a claim and provide proof that the insured is totally disabled
as defined by the WP benefit.
Total disability is the insured’s inability to perform the
essential duties of their own occupation or any other occupation
for which they are reasonably suited by education, training, or
experience.
The insured must be totally disabled for three to six months
before the insurer will waive premium payments.
Disabilities resulting from self-inflicted injuries and injuries
suffered while committing a crime are typically excluded.
In cases with variable premiums (universal and variable life
insurance policies), charges that are waived vary depending on
the terms of the WP benefit rider.
35
Waiver of Premium for Payor Benefit
15. Waiver of premium for payor benefit provides that the insurance
company will waive its right to collect a policy’s renewal
premiums if the policyowner dies or becomes totally disabled.
Usually this is included as a rider to a juvenile insurance policy,
one that is issued on the life of a child but owned and paid for
by an adult.
Premium payments are only waived until the insured reaches a
certain age.
A policyowner is totally disabled during the first two years of
disability if they are unable to perform the essential duties of
their own occupation. After that, they are considered totally
disabled if they cannot perform the essential duties of any
occupation for which they are reasonably suited by education,
training, or experience.
36
Disability Income Benefit
The disability income benefit provides a monthly income
benefit to the policyowner-insured if they become totally
disabled while the policy is in force.
Definition for total disability is the same as WP, as is the wait
period.
Usually the income is a certain percentage of the policy’s face
amount.
Generally this goes hand in hand with WP.
37
Accidental Benefits
Accidental death benefit a supplemental life insurance policy
benefit that provides a death benefit in addition to the policy’s
basic death benefit if the insured dies as a result of an accident.
Double indemnity benefit when the amount of accidental death
benefit is equal to the face amount of the life insurance policy.
16. Determining the precise cause of an insured’s death can
sometimes be quite difficult.
Some exclusions: suicide, war related accidents, aviation-
related accidents if the insured was not a passenger, and
accidents resulting from the insured committing a crime.
Accidental death and dismemberment (AD&D) provides
accidental death benefits and provides a dismemberment benefit
payable if an accident causes the insured to lose any two limbs
or sight in both eyes.
38
Accelerated Death Benefits
Also known as a living benefit, this provides that a policyowner
may elect to receive all or part of the policy’s death benefit
before the insured’s death under certain conditions.
Usually only offered on policies with larger face amounts.
Three commonly offered types of accelerated death benefits:
terminal illness benefit, dread disease benefit, and long-term
care benefit.
39
Accelerated Death Benefits
Terminal illness (TI) benefit a benefit under which the insurer
pays a portion of the policy’s death benefit to a policyowner-
insured who suffers from a terminal illness and has a physician-
certified life expectancy of less than a stated time, generally 12
or 24 months.
Typically paid for by an administrative charge that the insurer
assesses when a policyowner-insured elects to exercise the TI
benefit.
40
Accelerated Death Benefits
17. Dread disease (DD) benefit an accelerated death benefit under
which the insurer agrees to pay a portion of the policy’s face
amount to the policyowner if the insured suffers from one of a
number of specified diseases.
Diseases included: life-threatening cancer, coronary artery
bypass surgery, heart attack, stroke, end-stage kidney failure,
AIDS
Some DD benefits include organ transplants and Alzheimer’s
disease.
41
Accelerated Death Benefits
Long-term care (LTC) insurance benefit ab accelerated death
benefit under which the insurer agrees to pay a monthly benefit
to a policyowner if the insured requires constant care for a
medical condition.
The care given and the medical condition required to qualify are
specified in the LTC policy rider or provision.
Premiums generally are waived on both the long-term care
benefit and the basic life insurance policy.
The amount paid is generally a percentage of the policy’s face
amount.
Typically there is a 90 day waiting period before benefits are
payable.
42
Benefits for Additional Insureds
Spouse insurance rider a supplemental life insurance policy
benefit that provides term life insurance coverage on the
insured’s spouse. Typically sold on the basis of coverage units.
Most insurance companies do not offer more than 5 or 10
coverage units.
Children’s insurance rider a supplemental life insurance policy
benefit that provides term life insurance coverage on the
18. insured’s children. Some insurers combine spouse and
children’s insurance coverage into one rider, a spouse and
children’s insurance rider.
Second insured rider a supplemental life insurance policy
benefit that provides term insurance coverage on the life of a
person other than the policy’s insured. Can be spouse, another
relative, or an unrelated person. Typically the coverage is
greater than the spouse’s insurance rider.
43
Insurability Benefits
Guaranteed insurability (GI) benefit a supplemental life
insurance policy benefit that gives the policyowner the right to
purchase additional insurance of the same type as the basic life
insurance policy. The premium for the additional coverage is
based on the insured’s attained age when the additional
insurance is purchased. If the policyowner does not exercise the
option to buy extra coverage on the specified dates, that option
is lost forever, though the policyowner is permitted to exercise
the next option when it comes due.
44
Insurability Benefits
Paid-up additions option benefit a supplemental life insurance
policy benefit that allows the owner of a whole life insurance
policy to purchase single-premium paid-up additions to the
policy on stated dates in the future without providing evidence
of the insured’s insurability.
Premiums for the paid-up additions are based on the insured’s
attained age at the time the paid-up additions are purchased.
Most riders state that if the policyowner does not exercise the
purchase option for a stated number of years, then the rider will
terminate. At that time, the paid-up additions already purchased
remain in force, but the policyowner can no longer exercise the
19. option to purchase new paid-up additions.
45
Life and Health Insurance FIN 3660
Chapter 8
Individual Life Insurance Policy Provisions
Objectives
Describe the free-look provision of an insurance policy.
Identify the documents that make up the entire contract between
the owner of a life insurance policy and the insurer.
Explain the purpose and operation of the incontestability
provision.
Apply the terms of the standard grace period provision in a
given situation to determine whether a life insurance policy has
lapsed for nonpayment of premium.
Identify situations in which a life insurance policy can be
reinstated and the conditions the policyowner must meet to
reinstate the policy.
Describe the rights provided by a policy loan provision and a
policy withdrawal provision, and explain the differences
between a policy loan and a commercial loan.
Identify and describe the nonforfeiture options typically
included in cash value life insurance policies.
Identify the exclusions that insurers sometimes include in
individual life insurance policies
47
Standard Policy Provisions
Free-Look Provision (“free-examination provision” or “cooling-
20. off provision”) – gives the policyowner a stated period of time –
usually 10-30 days – after the policy is delivered in which to
examine the policy
The free-look period runs from the date the policy is delivered
to the policyowner, not from the date of issue
During the free-look period, the policy owner has the right to
cancel and receive a refund of the premium
48
Entire Contract Provision
Entire Contract Provision – defines the documents that
constitute the contract between the insurance company and the
policyowner
Closed Contract – a contract for which only those terms and
conditions that are printed in – or attached to – the contract are
considered to be part of the contract
Open Contract – a contract that identifies the documents that
constitute the contract between parties, but all the enumerated
documents are not necessarily attached to the contract
Declaration of Insurability – a form in which a proposed insured
answers specific questions about his medical history
49
Contact Provision (Cont.)
In addition to defining the documents that make up the contract,
the entire contract provision usually state that:
Only specified individuals – such as certain officers of the
insurer – can change the contract
No change is effective unless made in writing
No change will be made unless the policyowner agrees to it in
writing
50
21. Incontestability Provision
Insurance laws in many jurisdictions impose two important
limits on an insurer’s right to avoid an insurance contract on the
basis of misrepresentation:
Only certain misrepresentation – referred to as material
misrepresentations – give the insurer the right to avoid an
insurance contract
The insurer has only a limited amount of time in which to avoid
an insurance contract
Incontestability Provision – describes the time limit within
which the insurer has the right to avoid the contract on the
ground of material misrepresentation in the application
51
Material Misrepresentation
Misrepresentation – a false or misleading statement in an
application for insurance
Material Misrepresentation – a misrepresentation that is
relevant to the insurance company’s evaluation of the proposed
insured
A misrepresentation is considered material if, had the truth been
known, the insurer would not have issued the policy or would
have issued the policy on a different basis, such as with a
higher premium or a lower face amount
52
Operation of the Incontestability Provision
Fraudulent Misrepresentation – a misrepresentation that was
made with the intent to induce the other party to enter into a
contract and that did induce the innocent party to enter into the
contract
Obtaining sufficient evidence to prove that a misrepresentation
22. was fraudulent usually is quite difficult
“During the lifetime of the insured” is an important part of the
incontestability clause
This phrase makes the policy contestable forever if the insured
dies during the contestable period
If this phrase were not included and the insured died during the
contestable period, the beneficiary could possibly delay making
a death claim until after the contestable period expired
The incontestability provision is to assure policyowners and
beneficiaries that, after the contestable period has ended, the
insurer cannot avoid the policy on the basis of a material
misrepresentation in the application for insurance.
53
Grace Period Provision
Grace Period Provision- Specifies a length of time following
each renewal premium due date within which the premium may
be paid without loss of coverage.
Grace period- the specified time; typically 30 or 31 days.
Coverage remains in force throughout that period.
If a required renewal premium is not paid by the end of the
grace period, a life insurance policy typically lapses; however,
cash value life insurance policies contain a nonforfeiture
provision that typically allows a policyowner to continue
coverage under specific circumstances even if a renewal
premium is not paid by the end of the grace period.
The grace period provision contained in a universal life
insurance policy applies when the cash value is insufficient to
meet the policy’s monthly mortality and expense charges.
54
Reinstatement Provision
Reinstatement Provision- describes the conditions that the
policyowner must meet to reinstate a policy.
23. Reinstatement- the process by which a life insurance company
puts back into force a life insurance policy that either has been
terminated because of nonpayment of renewal premiums or has
been continued under the extended term or reduced paid-up
insurance nonforfeiture option.
The following conditions typically must be met to reinstate a
policy:
The policyowner must complete a reinstatement application
within the time frame stated in the reinstatement provision.
The policyowner must provide the insurance company with
satisfactory evidence of the insured’s continued insurability.
The policyowner must pay a specified amount of money; the
amount required depends on the type of policy being reinstated.
The policyowner may be required to either pay any outstanding
policy loan or have the policy loan, including any additional
accrued interest, reinstated with the policy.
55
Misstatement of Age or Sex Provision
A misstatement of the insured’s age or sex is a significant
error.
Most life insurance policies include a misstatement of age or
sex provision that describes the action the insurer will take to
adjust the amount of the policy benefit in the event that the age
or sex of the insured is incorrectly stated.
Insurers adjust the face amount of the policy when they
discover a misstatement of age or sex after the death of the
insured.
If the misstatement is discovered before the death of the
insured, the insurer may give the policyowner the option to pay-
or receive as a refund- any premium amount difference caused
by the misstatement instead of having the insurer adjust the
policy’s face amount.
56
24. Policy Loans and Policy Withdrawls
Cash value life insurance policies typically grant the
policyowner the right to borrow money from the insurer by
using the cash value of the policy as security for the loan.
Policy Loan Provision- specifies the terms on which the
policyowner of a cash value insurance policy can obtain a loan
against the policy’s cash value.
Some policy loan provisions allow the policyowner to take out a
loan in an amount that does not exceed the policy’s cash value
less one year’s interest on the loan.
Policy loan vs. commercial loan:
The policyowner is not legally obligated to repay a policy loan.
Policy loan can be repaid at any time.
The insurance company does not perform a credit check on the
policyowner for a policy loan.
Policy Withdrawal Provision-permits the policyowner to reduce
the amount of the policy’s cash value by withdrawing up to the
amount of the cash value in cash.
57
Nonforfeiture Provision
Nonforfeiture Provision- sets forth the options available to the
owner of a cash value policy if the policy lapses or if the
policyowner decides to surrender- or terminate- the policy.
Nonforfeiture options: cash payment nonforfeiture option, two
continued insurance coverage options, and the automatic
premium loan option.
Most policies include an automatic nonforfeiture benefit which
is a specific nonforfeiture benefit that becomes effective
automatically when a renewal premium for a cash value life
insurance policy is not paid by the end of the grace period and
the policyowner has not elected another nonforfeiture option.
25. 58
Cash Payment Nonforfeiture Option
Cash Payment Nonforfeiture Option- states that a policyowner
who discontinues premium payments can elect to surrender the
policy and receive the policy’s cash surrender value in a lump-
sum payment.
Cash value policies include a chart that lists cash surrender
values at various times, and these policies describe the method
used to compute those values.
The amount of cash value actually available to the policyowner
upon surrender of the policy may not be the exact cash
surrender value amount described in the policy.
After additions and subtractions have been made, the amount
the policyowner receives is called the net cash surrender value.
59
Nonforfeiture (Cont.)
Reduced paid-up insurance nonforfeiture option- the policy’s
net cash surrender value is used as a net single premium to
purchase paid-up life insurance of the same plan as the original
policy.
The premium charged for the paid-up insurance is based on the
insured’s attained age when the option goes into effect.
Policies including this option typically contain a chart listing
the amount of reduced paid-up insurance that is available each
year for the first 20 years the policy is in force.
Any supplemental benefits that were available on the original
policy are not usually available when the policy is continued as
a reduced paid-up insurance.
60
Nonforfeiture (Cont.)
26. Extended Term Insurance Nonforfeiture Option- the insurance
company uses the policy’s net cash surrender value to purchase
term insurance for the full coverage amount provided under the
original policy, for as long a term as the net cash surrender
value can provide.
Life insurance policies that contain the extended term insurance
option typically contain a chart showing the length of time the
original face amount of the policy will be continued in force
under the extended term option for each of the first 20 policy
years.
Because of the way they usually operate, universal life
insurance policies typically do not include an extended term
insurance nonforfeiture option.
61
Automatic Premium Loan Option
Automatic Premium Loan (ALP) Option- the insurer will
automatically pay an overdue premium for the policyowner by
making a loan against the policy’s cash value as long as the
cash value equals or exceeds the amount of the premium due.
The use of the ALP option keeps the original policy in force for
the full amount of coverage, including all supplemental
benefits.
Universal life insurance policies usually do not include an ALP
provision because a similar benefit is already provided in these
policies as apart of their monthly cash value deduction
mechanism.
62
Life Insurance Policy Exclusions
Exclusions- provisions that describe circumstances under which
the insurer will not pay the policy proceeds following the death
of the insured.
Suicide Exclusion Provision- states that policy proceeds will
27. not be paid if the insured dies as the result of suicide as defined
by the policy within a specified period following the date of
policy issues.
Other exclusion can include:
War Exclusion Clause- the insurer will not pay the policy
proceeds if the insured’s death results from war or an act of
war.
Hazardous Activities Exclusion Provision- the insurer will not
pay the policy proceeds if the insured’s death results from
specified dangerous activities such as mountain climbing, sky
diving, or scuba diving.
Aviation Exclusion Provision- the insurer will not pay the
policy proceeds if the insured’s death results from aviation-
related activies.
63
Sample Whole Life Insurance Policy
Insured John Doe
Age 35
Face Amount $100,000
Policy Date August 1, 2015
Type Whole Life Paid Up at 90
Participating
Premium $1533/year for 55 years
Policy Terms
Owner John Doe
Beneficiary Jane Doe
28. Sample Table
of Guaranteed Values
End of $100,000
Policy August Cash Paid-Up Extended Term
Year 1 Value Insurance Insurance To
10 2015 11,411 37,400 Oct 13, 2043
15 2030 19,629 51,900 Jun 19, 2051
Life Insurance – Example 1
John Doe terminates the policy on August 1, 2025.
He selects the extended term option.
John dies on December 12, 2043.
How much does Jane receive?
A) 0
B) $11,411
C) $37,400
D) $100,000
E) None of the above
Life Insurance – Example 2
What if John Doe had selected the Paid-Up
insurance option instead? How much does Jane receive?
A 0
B $11,411
C $37,400
D $100,000
E None of the above
29. Statement of Policy Costs and Benefit Information
Dividend Choices
Reduce Premium
Paid-Up Additions
Section 1 - The Contract
Life Insurance Benefit
Entire Contract; Changes
Incontestability
Suicide
Misstatement of Age or Sex
Life Insurance – Example 3
John Doe commits suicide on August 2, 2015, the day after the
policy was issued? How much does Jane receive?
A 0
B $1533
C $50,000
D $100,000
E None of the above
Section 2 - Ownership
The Owner
Transfer of Ownership
Collateral Assignment
30. Section 3 - Premiums and Reinstatement
Premium Payment
Payment
Frequency (Assume annual)
Grace Period - 31 days
Premium Refund at Death (Ignore for assignment)
Reinstatement
Section 4 - Dividends
Annual dividends
Use of dividends
Paid-up additions
Dividend accumulations
Premium payments
Dividend at death
Cash Values, Extended Term and Paid-Up Insurance
Cash Value
Extended Term Insurance
Paid-Up Insurance
Cash Surrender
Table of Guaranteed Values
Life Insurance – Example 4
John keeps the policy in force for 15 years and then surrenders
it for the cash value. During that time he has paid a total of
$22,995 in premiums (15 x $1533) and received a total of
$7,995 in dividends. How much of the policy proceeds are
31. taxable income?
A) 0
B) $4,629
C) $36,900
D) $85,000
E) None of the above
Loans
Loans
Policy Loan
Premium Loan
Loan Value
Policy Debt
Loan Interest
Specified Rate (4%)
Variable Rate
Life Insurance Policy Ownership Rights
Life and Health Insurance FIN 3660
Chapter 9
Life Insurance Policy Ownership Rights
An insurance policy is a contract between the insurer and the
policyowner and is subject to the rules of contract law.
Property – a bundle of rights a person has with respect to
something.
Real Property – land and whatever is growing on or attached to
the land.
Personal Property – all property other than real property.
32. Tangible Property – property that has physical form, such as
automobiles, jewelry, or clothing.
Intangible Property – property that represents ownership of a
legal right, such as a contractual right.
Ownership of Property – the sum of all the legal rights that
exist in that property.
79
Naming the Beneficiary
Class designation – a beneficiary designation that identifies a
certain group of persons, rather than naming each person.
Primary and Contingent Beneficiaries
Primary (first) Beneficiary – the party designated to receive the
policy proceeds following the death of the insured.
Contingent (second or successor) Beneficiary – receives the
policy proceeds only if all designated primary beneficiaries
have predeceased the insured.
Insurers usually prefer that policyowners name at least a
primary and a contingent beneficiary.
80
Naming the Beneficiary
Changing the Beneficiary
Right of revocation – the right to change the beneficiary
designation.
Revocable beneficiary – a beneficiary designation is said to be
revocable if the policyowner has the unrestricted right to change
the designation during the life of the insured.
Vast majority of beneficiaries of life insurance policies are
revocable beneficiaries.
Can only be made during the insured’s lifetime.
Vested interest – a property right that has taken effect and
cannot be altered or changed without the consent of the person
who owns the right.
33. Irrevocable beneficiary – a beneficiary designation is said to be
irrevocable if the policyowner has the right to change the
beneficiary designation only after obtaining the beneficiary’s
consent.
Policyowner may at any time designate a beneficiary as an
irrevocable beneficiary.
Under certain circumstances, a policyowner may be able to
name a new beneficiary, even if the original beneficiary
designation is irrevocable.
81
Mode of Premium Payment
Most individual life insurance policyowners pay periodic
renewal premiums to keep their policies in force.
Premium payment mode – the frequency at which renewal
premiums are payable.
Renewal premiums for an individual life insurance policy
generally are stated as an annual premium amount due.
Insurers seek to keep their administrative costs down by
requiring scheduled renewal premium payments to be at least
equal to a stated minimum amount.
82
Policy Dividends
Participating policy: (par policy) is a type of policy under
which the policyowner shares in the insurance company’s
divisible surplus.
Nonparticipating policy: (nonpar policy) is a type of policy
under which the policyowner does not share in the insurer’s
surplus.
Divisible surplus: a portion of an insurance company’s surplus
set aside specifically for distribution to owners of participating
policies.
34. Policy dividend: a policyowner’s share of the divisible surplus.
Dividend options: specified methods by which the owner of a
participating life insurance policy or participating annuity may
receive policy dividends.
Automatic dividend option: a specified policy dividend option
that the insurer will apply if a policyowner does not choose an
option.
83
Policy Dividends
Cash Dividend Option – the insurance company sends the
policyowner a check in the amount of the policy dividend that
was declared.
Premium Reduction Dividend Option – the insurer applies
policy dividends toward the payment of renewal premiums.
Unless a policy has been in force for many years, the annual
policy dividend usually is not large enough to pay an entire
annual renewal premium.
Policy Loan Repayment Dividend Option – the insurer applies
policy dividends toward the repayment of an outstanding policy
loan. The amount of the policy dividend usually is applied first
to repay any outstanding interest on the loan and then to repay
the loan principal.
84
Policy Dividends
Accumulation at Interest Dividend Option – the policy
dividends are left on deposit with the insurer to accumulate at
interest.
Paid-up Additional Insurance Dividend Option – the insurer
uses any declared policy dividend to purchase paid-up
additional insurance on the insured’s life.
Additional Term Insurance Dividend Option – the insurer uses
each policy dividend to purchase one-year term insurance on the
35. insured’s life.
Insurers often limit to the amount of the policy’s cash value the
maximum amount of one-year term insurance that can be
purchased each year.
Before a policyowner is permitted to change from another
dividend option to the additional term insurance option, insurers
usually require evidence of the insured’s insurability.
85
Transfer of Policy Ownership
If the owner of a life insurance policy has contractual capacity,
then she has the right to transfer ownership of some or all of her
rights in the policy.
Transfer of Ownership by Assignment
Assignment: an agreement under which the policyowner
transfers some or all of his ownership rights in the policy to
another party.
To make a valid assignment of an insurance policy, the
policyowner must have contractual capacity.
May not infringe on the vested rights of an irrevocable
beneficiary.
An assignment that is made for illegal purposes, such as
speculating on a life, is invalid.
86
Transfer of Policy Ownership
Types of Assignment – an assignment may take one of two
forms:
Absolute Assignment: an assignment under which a policyowner
transfers all of his policy ownership rights to the assignee.
Collateral Assignment: a temporary assignment of the monetary
value of a life insurance policy as collateral—or security—for a
36. loan.
The collateral assignee’s rights are limited to those ownership
rights that directly concern the monetary value of the policy.
The collateral assignee has a vested right to the policy’s
monetary values, but that right is limited.
The collateral assignee’s rights to the policy values are
temporary.
Assignment Provision – describes the roles of the insurer and
the policyowner when the policy is assigned.
87
Transfer of Policy Ownership
Transfer of Ownership by Endorsement
Many life insurance policies issued today specify a simple,
direct method of transferring all the policy’s ownership rights.
Endorsement method – policy ownership is completely
transferred without requiring the policyowner to enter into a
separate assignment agreement.
The right to change the policy’s owner is generally specified in
the change of ownership provision in the policy.
88
Right to Receive Policy Proceeds
Upon an insured’s death, the beneficiary has a vested right to
receive the policy proceeds.
Identifying Who is Entitled to Policy Proceeds
No Surviving Beneficiary : if no beneficiary has been named or
none of the named beneficiaries is living when the insured dies,
then the policy proceeds typically are paid to the policyowner,
if the policyowner is living. If the policyowner is deceased,
then the proceeds are paid to the policyowner’s estate.
-- preference beneficiary clause (succession beneficiary clause):
37. states that if the policyowner does not name a beneficiary, then
the insurer will pay the policy proceeds in a stated order of
preference.
Insured and Beneficiary Die in a Common Disaster
-- common disaster: the insurer and the beneficiary die in the
same accident; the accident or disaster was common to more
than one person.
89
Right to Receive Policy Proceeds
Insured and Beneficiary Die in a Common Disaster
-- Simultaneous death act: governs how insurance companies are
to evaluate common-disaster situations.
-- Survivorship clause: states that the beneficiary must survive
the insured by a specified period, usually 30 or 60 days, to be
entitled to receive the policy proceeds.
Beneficiary Wrongfully Kills the Insured
-- Permitting someone to profit from the wrongful killing of
another person is not in the public interest.
-- Laws in many countries disqualify a beneficiary from
receiving the policy proceeds if the beneficiary wrongfully and
intentionally killed the insured.
90
Calculating the Amount of the Benefit Payable
The insurer first adds together the following items:
Basic death benefit payable – the policy’s face amount.
However, if the policy was in force under the reduced paid-up
insurance nonforfeiture option when the insured died, then the
amount of the basic death benefit payable is less than the face
amount.
The amount of any accidental death benefits payable
The amount of any declared but unpaid policy dividends
The amount of any accumulated policy dividends, including
38. interest, left on deposit with the insurer
The face amount of any paid-up additions
The amount of any unearned premiums paid in advance.
Policyowners sometimes pay premiums before those premiums
are due.
91
Calculating the Amount of the Benefit Payable
After totaling the amount of the foregoing items, the insurer
then subtracts the following items from that total:
The amount of any outstanding policy loans, including any
unpaid interest.
The amount of any premium due and unpaid at the time of the
insured’s death. This item appears when the insured dies during
the policy’s grace period before the premium due has been paid.
92
Paying Policy Benefits Under a Settlement Option
Settlement option (optional modes of settlement) – alternative
methods that the owner or beneficiary of a life insurance policy
can elect for receiving payment of the policy proceeds.
Settlement option provision – grants a policyowner or a
beneficiary several choices as to how the insurance company
will distribute the proceeds of a life insurance policy.
Payee – the person or party who is to receive the policy
proceeds under a settlement option.
Contingent payee (successor payee) – receives any proceeds
still payable at the time of the payee’s death.
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Paying Policy Benefits Under a Settlement Option
39. Interest Option
A settlement option under which the insurance company invests
the policy proceeds and periodically pays interest on those
proceeds to the payee.
Fixed Period Option
A settlement option under which the insurance company agrees
to pay policy proceeds in equal installments to the payee for a
specified period of time.
Fixed Amount Option
A settlement option under which the insurance company pays
equal installments of a stated amount until the policy proceeds,
plus the interest earned, are exhausted.
Life Income Option
A settlement option under which the insurance company agrees
to pay the policy proceeds in periodic installments over the
payee’s lifetime.
Life annuity: an annuity that provides periodic income payments
for at least the lifetime of a named individual.
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Interest Option
Interest Option
A settlement option under which the insurance company invests
the policy proceeds and periodically pays interest on those
proceeds to the payee
The payee generally has the right to withdraw all or part of the
policy proceeds at any time or to place all of the proceeds under
another settlement option.
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Fixed Period Option
Fixed Period Option
A settlement option under which the insurance company agrees
to pay policy proceeds in equal installments to the payee for a
40. specified period of time.
The amount of each installment paid under the fixed period
option depends primarily on the amount of the policy proceeds,
the interest rate, and the length of the payment period that the
policyowner or beneficiary chooses.
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Fixed Amount Option
Fixed Amount Option
A settlement option under which the insurance company pays
equal installments of a stated amount until the policy proceeds,
plus interest earned, are exhausted.
The number of installments that the insurer will pay depends on
the amount of the policy proceeds, the interest rate, and the
fixed amount selected.
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Life Income Option
Life Income Option
A settlement option under which the insurance company agrees
to pay the policy proceeds in periodic installments over the
payee’s lifetime.
Life Annuity
An annuity that provides periodic income payments for at least
the lifetime of a named individual.
98
Question 1
Some life insurance policies include a clause which states that
41. the beneficiary must outlive the insured by a specified period to
be entitled to receive the policy proceeds. Under this type of
clause, if the beneficiary does not outlive the insured by the
specified period of time, then the policy proceeds are paid as if
the beneficiary predeceased the insured. As a result, the policy
proceeds are more likely to be distributed as the policyowner
had intended. By definition, this type of clause is known as a
Question 1 options:
1)
right of revocation clause
2)
succession beneficiary clause
3)
survivorship clause
4)
key person clause
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Question 2 (4 points)
Educational fund planning for dependent children can be based
on parents’ paying less
than 100% of college costs when incurred.
Question 2 options:
1) True
2) False
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42. Question 3 (4 points)
Some financial advisers suggest ignoring interest earnings and
inflation rates when
evaluating life insurance needs.
Question 3 options:
1) True
2) False
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Question 4 (4 points)
Lindsay Inthachak was the policyowner-insured of a whole life
insurance policy. Lindsay designated her husband, Stephen, as
the party to receive the policy proceeds following her death.
Lindsay designated their daughter, Lily, to receive the policy
proceeds if Stephen predeceases Lindsay. In this situation,
Stephen is the type of policy beneficiary known as a
Question 4 options:
1)
contingent beneficiary
2)
primary beneficiary
3)
secondary beneficiary
4)
successor beneficiary
43. Save
Question 5 (4 points)
The insurance company reserves the right to refuse additional
premium payments if
the policy is in danger of being overfunded.
Question 5 options:
1) True
2) False
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Question 6 (4 points)
Reliance on nationwide averages and general guidelines assures
financial advisers that
they will not overlook any important considerations for
their clients when evaluating life
insurance needs.
Question 6 options:
1) True
2) False
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Question 7 (4 points)
There may be court fees related to the appointment of an
executor or administrator of
the deceased’s estate.
Question 7 options:
1) True
2) False
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44. Question 8 (4 points)
Under the nonliquidating approach to funding income needs, the
capital fund will
eventually be totally dissipated.
Question 8 options:
1) True
2) False
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Question 9 (4 points)
Unrealized gains and losses have no effect on the value of
deferred variable annuity
contracts’ accumulation units.
Question 9 options:
1) True
2) False
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Question 10 (4 points)
Safety margins are introduced into annuity mortality tables by
increasing the morality
rates above those expected.
Question 10 options:
1) True
2) False
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Question 11 (4 points)
Scott Herbermann is the policyowner-insured of a $200,000
45. whole life insurance policy. The policy includes a supplemental
benefit rider that gives Mr. Herbermann the right to purchase
$25,000 of additional whole life insurance at age 34, age 37,
and age 40, without submitting evidence of insurability. This
information indicates that Mr. Herbermann’s policy includes the
type of supplemental benefit known as
Question 11 options:
1)
an additional insured rider
2)
a paid-up additions option benefit
3)
a guaranteed insurability (GI) benefit
4)
credit life insurance
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Question 12 (4 points)
In addition to lump-sum settlements of policy proceeds, insurers
also make available to the policyowner and to the beneficiary
alternative settlement options for receiving life insurance policy
proceeds. With regard to these settlement options, it is correct
to say
Question 12 options:
1)
that the life income option typically results in larger installment
payments than would be available under the fixed amount or
46. fixed period options
2)
that a policyowner who selects the interest option cannot place
restrictions on the payee’s right to withdraw the policy proceeds
3)
that, under the fixed period option, the payee usually has the
right to withdraw only a part of the policy proceeds during the
payment period
4)
that, under the fixed amount option, the insurer pays equal
installments of a stated amount to the payee until the policy
proceeds, plus the interest earned, are exhausted
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Question 13 (4 points)
Life insurance benefits payable directly to the beneficiary will
not be subject to delays
in settling the estate.
Question 13 options:
1) True
2) False
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Question 14 (4 points)
Variable universal life has universal life’s premium flexibility
and variable life’s
policyowner-directed investments.
47. Question 14 options:
1) True
2) False
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Question 15 (4 points)
The main difference between annuities and life insurance is
there is no pooling of the
funds from each annuity contract purchaser.
Question 15 options:
1) True
2) False
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Question 16 (4 points)
The cash value of a life insurance policy is not a source of
emergency funds for
preserving or repairing damaged property.
Question 16 options:
1) True
2) False
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Question 17 (4 points)
Policy loans under universal life policies do not affect the
growth rate of policy cash
values.
Question 17 options:
1) True
48. 2) False
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Question 18 (4 points)
Annuity contracts can be used both to accumulate funds and to
liquidate the
accumulated funds over the annuitant’s remaining
lifetime.
Question 18 options:
1) True
2) False
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Question 19 (4 points)
One criticism of variable life insurance is that prospective
purchasers are unable to
determines the applicable expenses for commissions,
premium taxes, and insurance
company overhead.
Question 19 options:
1) True
2) False
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Question 20 (4 points)
The capital needs approach to funding income needs uses a
liquidating methodology.
Question 20 options:
1) True
49. 2) False
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Question 21 (4 points)
Variable life insurance purchasers now have more fund options
to choose from than
in past decades.
Question 21 options:
1) True
2) False
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Question 22 (4 points)
The difference between an endowment insurance policy and a
cash value life insurance policy is that only the endowment
insurance policy
Question 22 options:
1)
pays a fixed benefit whether the insured survives to the policy’s
maturity date or dies before that maturity date
2)
has premiums that are level throughout the term of the policy
3)
steadily builds a cash value
4)
receives favorable federal income tax treatment in the United
States
50. Save
Question 23 (4 points)
An insurance policy is a contract between the insurer and the
policyowner and is subject to the rules of contract law. An
insurance policy also is a type of property and, thus, is subject
to the principles of property law. In legal terminology, property
is classified as either real property or personal property and as
tangible property or intangible property. With regard to these
classifications, an insurance policy is classified correctly as
Question 23 options:
1)
tangible real property
2)
tangible personal property
3)
intangible real property
4)
intangible personal property
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Question 24 (4 points)
Lump-sum needs for funds at death include outstanding debt
that becomes due and
payable at death.
Question 24 options:
51. 1) True
2) False
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Question 25 (4 points)
Based on the 2001 CSO mortality table on pages 280-85 of the
text, the probability of
a male living at age 40 dying at age 45 is 0.00265 (that
is, the probability shown in the
column headed “Yearly Probability of Dying” for age
45).
Question 25 options:
1) True
2) False
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