Question

In: Finance

25/ The main purpose of cash value inside a whole life policy is to A.pay the...

25/ The main purpose of cash value inside a whole life policy is to

A.pay the premiums in the the current years.

B.pay for the cost of insurance in the the current years.

C.pay for the cost of insurance in the later years.

D.take advantage of stock options offered by the insurance company.

36/ Since it is difficult to predict economic conditions and determine how different types of investments will perform in a given period, it may be better to base your asset allocation decisions on:

A.the assets offered by your broker.

B.your instincts.

C.your stage in life and degree of risk tolerance.

D.the advice of your banker.

37/ Universal life insurance

A.does not have a fixed premium.

B.is classified as a term life insurance policy.

C.provides insurance over a specified term like whole life insurance.

D.has a savings component like term life insurance.

Expert Solution

25. The answer is C.pay for the cost of insurance in the later years.

36. The answer is C. your stage in life and degree of risk tolerance.

37. The answer is D.has a savings component like term life insurance.

jeff jeffy answered 3 years ago

Investment B is represented by the cash value of a whole life insurance policy. Returns on...

Investment B is represented by the cash value of a whole life insurance policy. Returns on this Investment for the past 6 years are detailed in the table below, and Carlo expects the returns of the next 6 years to be the same as the last 6 years. Year Return 1 +4.9% 2 +5.0% 3 +4.6% 4 +5.1% 5 +4.9% 6 +4.8% 9. Taking only the beginning and ending balances of the investment into account in order to smooth the...

In the past, Insurance industry focused mainly on marketing of Cash Value life insurance policies. Whole...

In the past, Insurance industry focused mainly on marketing of Cash Value life insurance policies. Whole Life insurance with a saving component was being promoted as effective “forced saving” tools. Nowadays, Term life insurance is being promoted as a more “effective” insurance product. More and more insurance companies encourage consumer to “buy term and invest the difference”. In no more than 3 pages, identify all critical factors in determining whether Term life or Cash value life insurance would better suits...

Research the differences in the premium costs for a $100,000 whole life insurance policy and a...

Research the differences in the premium costs for a $100,000 whole life insurance policy and a $100,000 term life insurance policy. Which is more expensive? Why is there a price difference between the two? Which would you prefer and why?

Maxwell Simmons has a life insurance policy with a face value of $250,000 and a cash...

Maxwell Simmons has a life insurance policy with a face value of $250,000 and a cash value of $77,000. Maxwell was killed in an auto accident shortly after borrowing $56,000 from his policy. Assuming interest had been paid but no principal was repaid, how much would Maxwell's beneficiary receive? A. $194,000 B. $173,000 C. $250,000 D.$117,000

sharon tranfers to Russ a life insurance policy with a cash surrender value of 27,000 and...

sharon tranfers to Russ a life insurance policy with a cash surrender value of 27,000 and a face value of 100,000 in exchange for real estate. Russ continues to buy the premiums of the until sharon dies. 7 years later. At that time, Russ has paid 12, 000 , and he collects the 100, 000 face value. How much of the prceeds, if any is taxable to Russ?

Edible Chemicals Corporation owns a $2 million whole life insurance policy on the life of its...

Edible Chemicals Corporation owns a $2 million whole life insurance policy on the life of its CEO, naming Edible Chemicals as beneficiary. The annual premiums are $72,000 and are payable at the beginning of each year. The cash surrender value of the policy was $22,000 at the beginning of 2018. 1. & 2. Prepare the appropriate 2018 journal entries to record insurance expense and the increase in the investment assuming the cash surrender value of the policy increased according to...

11. The purpose of the suicide clause in a life insurance policy is to:

11. The purpose of the suicide clause in a life insurance policy is to:1. Exclude payment of death proceeds for suicide only during the first one or two years of the policy, thus providing the insurer with protection against an insured who purchases a life insurance policy with the intention of committing suicide.2. Exclude all death benefits that result from suicide to discourage policyholders who might contemplate ending their lives.3. Enable the insurer to retain paid premiums if an insured...

What type of life insurance policy does NOT build a cash value for policyholders? A. Universal...

What type of life insurance policy does NOT build a cash value for policyholders? A. Universal Life Insurance B. Term life Insurance C. Variable Life Insurance D. None of the above build a cash value E. Whole life Insurance

Alice has a life insurance policy with a cash surrender value of $200,000 on which she...

Alice has a life insurance policy with a cash surrender value of $200,000 on which she has paid $30,000 in premiums. She has decided to cash in the policy. Discuss the tax consequences if Alice is terminally ill and decides to use the proceeds to take a cruise around the world. a) She can exclude all of the gain in the policy ($200,000 less $30,000 of premiums paid) from gross income b) She must include all of the gain ($170,000)...

1. Alice has a life insurance policy with a cash surrender value of $200,000 on which...

1. Alice has a life insurance policy with a cash surrender value of $200,000 on which she has paid $30,000 in premiums. She has decided to cash in the policy. Discuss the tax consequences if Alice is terminally ill and decides to use the proceeds to take a cruise around the world. a. She must include all $200,000 received in gross income b. She must include $30,000 in gross income c. She must include all of the gain ($170,000) in...