RMI 3011 Final Exam Jones Question
and answers already passed
What are the perils affecting income? - correct answer ✔- Premature Death
- Disability
- Old Age
- Poor Health
- Unemployment
What is Premature Death? - correct answer ✔The death of a family head
with outstanding unfulfilled financial obligations.
What are the costs of premature death to the family? - correct answer ✔-
The family's share of the deceased breadwinner's future earnings is lost
forever.
- Results in additional expenses such as funeral costs, uninsured medical
bills, higher childcare expenses, estate settlement costs, and other final
expenses.
- Because of insufficient income, some families will experience a substantial
reduction in their standard of living.
- Survivors face certain non-economic costs such as intense grief, loss of a
parental role model, and counselling and guidance for the children.
Chance of dying is economic Justification of Life Insurance because: - correct
answer ✔- The purchase of life insurance is economically justified if the
,insured has earned income, and others are dependent on those earnings for
part or all their financial support.
- If a family head dies prematurely with dependents to support and
outstanding financial obligations, the surviving family members are exposed to
great economic insecurity.
- Life insurance can be used to restore the family's share of the deceased
breadwinner's earnings.
When deciding how much life insurance you need to purchase, what factors
should be considered? - correct answer ✔- Final expenses
- Estate liquidity
- Survivor(s) income needs
- Mortgage
- Education
- Legacy giving
When planning how long you need life insurance for, what factors should be
considered? - correct answer ✔- Focus on the duration of the need.
- Resist "all or nothing" advice.
What is the Human Life Value approach? - correct answer ✔- The present
value of the family's share of the deceased breadwinner's future earnings.
- FICA, federal taxes, retirement contributions, self-maintenance... now gone.
, What are the major defects of the Human Life Value approach? - correct
answer ✔- Doesn't consider other sources of income.
- Discount rate chosen is crucial.
What is the Needs approach? - correct answer ✔Method for estimating
amount of life insurance appropriate for a family by analyzing various family
needs that must be met if the family head should die and converting them into
specific amounts of life insurance.
What is the Estate Clearance fund? - correct answer ✔Provides cash
needed immediately for burial expenses; uninsured medical bills; installment
debts; estate administration expenses; and estate, inheritance, and income
taxes.
What is a Mortgage Redemption fund? - correct answer ✔The amount of
monthly income needed by surviving family members is greatly reduced when
monthly mortgage payments or rent payments are not required.
What is an Emergency fund? - correct answer ✔A family should also have
an emergency fund. An unexpected event may occur that requires large
amounts of cash, such as major dental work, home repairs, or a new car.
What is a Retirement fund? - correct answer ✔Because the family head may
survive until retirement, the need for adequate retirement income should also
be considered.
What are the components of the adequacy of life insurance? - correct answer
✔- Fear - Although term insurance premiums have declined to historically low
levels, consumers believe life insurance is too expensive to purchase.
and answers already passed
What are the perils affecting income? - correct answer ✔- Premature Death
- Disability
- Old Age
- Poor Health
- Unemployment
What is Premature Death? - correct answer ✔The death of a family head
with outstanding unfulfilled financial obligations.
What are the costs of premature death to the family? - correct answer ✔-
The family's share of the deceased breadwinner's future earnings is lost
forever.
- Results in additional expenses such as funeral costs, uninsured medical
bills, higher childcare expenses, estate settlement costs, and other final
expenses.
- Because of insufficient income, some families will experience a substantial
reduction in their standard of living.
- Survivors face certain non-economic costs such as intense grief, loss of a
parental role model, and counselling and guidance for the children.
Chance of dying is economic Justification of Life Insurance because: - correct
answer ✔- The purchase of life insurance is economically justified if the
,insured has earned income, and others are dependent on those earnings for
part or all their financial support.
- If a family head dies prematurely with dependents to support and
outstanding financial obligations, the surviving family members are exposed to
great economic insecurity.
- Life insurance can be used to restore the family's share of the deceased
breadwinner's earnings.
When deciding how much life insurance you need to purchase, what factors
should be considered? - correct answer ✔- Final expenses
- Estate liquidity
- Survivor(s) income needs
- Mortgage
- Education
- Legacy giving
When planning how long you need life insurance for, what factors should be
considered? - correct answer ✔- Focus on the duration of the need.
- Resist "all or nothing" advice.
What is the Human Life Value approach? - correct answer ✔- The present
value of the family's share of the deceased breadwinner's future earnings.
- FICA, federal taxes, retirement contributions, self-maintenance... now gone.
, What are the major defects of the Human Life Value approach? - correct
answer ✔- Doesn't consider other sources of income.
- Discount rate chosen is crucial.
What is the Needs approach? - correct answer ✔Method for estimating
amount of life insurance appropriate for a family by analyzing various family
needs that must be met if the family head should die and converting them into
specific amounts of life insurance.
What is the Estate Clearance fund? - correct answer ✔Provides cash
needed immediately for burial expenses; uninsured medical bills; installment
debts; estate administration expenses; and estate, inheritance, and income
taxes.
What is a Mortgage Redemption fund? - correct answer ✔The amount of
monthly income needed by surviving family members is greatly reduced when
monthly mortgage payments or rent payments are not required.
What is an Emergency fund? - correct answer ✔A family should also have
an emergency fund. An unexpected event may occur that requires large
amounts of cash, such as major dental work, home repairs, or a new car.
What is a Retirement fund? - correct answer ✔Because the family head may
survive until retirement, the need for adequate retirement income should also
be considered.
What are the components of the adequacy of life insurance? - correct answer
✔- Fear - Although term insurance premiums have declined to historically low
levels, consumers believe life insurance is too expensive to purchase.
