RMI FInal Exam| 100 Questions| Accurate Answers| Verified

RMI FInal Exam| 100 Questions| Accurate Executor Funds - ANSWER burial expenses, estate settlement costs Income needs of financially-dependent survivors - ANSWER Children Spouse or partner Other dependents (grandchildren, siblings, parents, friends, etc.) Business-related exposures - ANSWER Dependent projects (e.g., client relationships) Replacement of key employee Ownership Face Amount NEEDS - ANSWER Executor funds Income needs of financially-dependent survivors Business-related exposures Face Amount HUMAN LIFE VALUE - ANSWER Replace income in present value terms Consider expected salary increases Subtract living expenses and taxes Types of life insurance - ANSWER Term life Whole life Universal life other Term insurance - ANSWER Designed to provide protection if the insured person dies during a specified period of time Policy has a set end date, no coverage after (can be extended) No savings component Least expensive premiums per dollar of coverage Whole life insurance - ANSWER Designed to provide protection for the entire life of the insured No set end date (maturity provision) Savings component (builds up a"cash value") Premiums set by the insurer More expensive than term insurance Whole life premiums: Straight Life - ANSWER insured pays premiums (usually annually) indefinitely Whole life premiums: Limited Pay life - ANSWER insured pays premiums for a specified period of time (e.g., 20 years), and is not required to pay after that. Coverage remains in place for the rest of the insured's life Whole life premiums: Single Premium Life - ANSWER insured pays one lump sum at the onset of the contract and is not required to pay any more. Coverage remains in place for the rest of the insured's life. Universal Life Insurance - ANSWER Designed to provide protection for the entire life of the insured• No set end date (maturity provision)• Savings component (builds up a "cash value")• Cash value varies based on premiums paid, investment earnings, and the insurer's mortality experience• Insurer sets minimum initial premium, but policyholder usually decides the timing and size of subsequent premiums• More expensive than term insurance Universal Life insurance Type A - ANSWER Death benefit is a specified amount that remains the same while the policy is in force• This amount is what will be paid upon death -cash value is part of this flat amount• As cash values build up, the "mortality charge"component of premium decreases Universal Life insurance Type B - ANSWER Death benefit fluctuates• Payment upon death is the policy's cash value, plus a fixed amount of "death protection"• Small payment early, since cash values are small• Larger payment later as cash values increase Variable Life insurance - ANSWER version of whole life where the death benefit and cash value fluctuate with investment performance Variable universal life - ANSWER same as universal but policyholders have more choice over investments Modified life - ANSWER premiums are low in first 5-10 years then higher after industrial life - ANSWER intended to pay for funeral credit life - ANSWER decreasing term life insurance tied to specific loan Are premium payments taxable? - ANSWER No Lump sum vs. payment plan taxability - ANSWER death benefits are not taxable if paid in lump sum, if it is in payments, its taxable Answers| Verified