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Susan is a 42-year-old lawyer who has taken out a universal life insurance policy to protect...
Understanding universal life insurance Universal life insurance combines elements from term and whole life insurance. Term policies provide a death benefit _______ savings component, whole life policies provide a death benefit _______ savings component, and universal policies provide a death benefit _______ savings component. To understand how universal premiums are allocated, consider the following example. Kathy is a 37-year-old lawyer who has taken out a universal life insurance policy to protect her two children (ages 8 and 6) in the...
Susan is the beneficiary of a $50,000 insurance policy on the life of her mother, Kayla. To date, Kayla has paid premiums of $16,000 on the policy. Kayla elects to cancel the policy and receive $21,000, the cash surrender value of the policy. How much gross income must Kayla report as taxable income?
Sixteen years ago, Ms. Cole purchased a $576,000 insurance policy on her own life and named her son as sole beneficiary. She has paid $35,712 total premiums to keep this policy in force. This year, she liquidates the policy for its $44,352 cash surrender value. Does she recognize income on the liquidation? Now assume that Ms. Cole is terminally ill. The insurance policy provides that a person with a life expectancy of less than one year can liquidate the policy...
A $21,000 ordinary life insurance policy for a 23-year old female can be obtained for annual premiums of approximately $200. This type of policy (ordinary life) would pay a death benefit of $21,000 in exchange for the annual premium paid during the lifetime of the insured person. If the average life expectancy of a 23-year old female is 63 years, what interest rate establishes equivalence between cash outflows and inflows for this type of insurance policy? Assume all premiums are...
What types Of marketing messages should each of the three life insurance companies design to reach consurners such as John and Sandy. for either the information search. evaluation of alternatives. or both Stages Of the buying decision marking process? ohn Mulvaney just reached an important milestone in his life-birth of his first child. After seven years as a DINK (dual income-no kids) family, he and his wife Sandy decided it was time add a new member. At that point the...
1. Susan is the beneficiary of a $50,000 insurance policy on the life of her mother, Kayla. To date, Kayla has paid premiums of $16,000 on the policy. Kayla elects to cancel the policy and receive $21,000, the cash surrender value of the policy. How much gross income must Kayla report as taxable income? A. Kayla reports $5,000 of income. B. Kayla reports zero amount of taxable income. C. Kayla reports $21,000 of income. D. Kayla reports $50,000 of income....
An insurer has a portfolio of 1000 one-year term life insurance policies just issued to 1000 different (independent) individuals. Each policy will pay $1000 in the event that the policy holder dies within the year. For 500 of the policies, the probability of death is 0.01 per policyholder, and for the other 500 policies the probability of death is 0.02 per policyholder. Find the expected value and the standard deviation of the aggregate claim that the insurer will pay.
Sara is a 60-year-old Anglo female in reasonably good health. She wants to take out a $50,000 term (i.e., straight death benefit) life insurance policy until she is 65. The policy will expire on her 65th birthday. The probability of death in a given year is provided. 63 64 X = age 60 61 62 P(death at this age) 1 0.00607 0.00803 0.00875 0.01062 0.01165 Sara is applying to Big Rock Insurance Company for her term insurance policy. (a) What...
Sara is a 60-year-old Anglo female in reasonably good health. She wants to take out a $50,000 term (i.e., straight death benefit) life insurance policy until she is 65. The policy will expire on her 65th birthday. The probability of death in a given year is provided. x = age 60 61 62 63 64 P(death at this age) 0.00610 0.00968 0.00809 0.00945 0.01060 Sara is applying to Big Rock Insurance Company for her term insurance policy. (a) What is...
What are the quarterly payments on a $100,000 universal life insurance policy for a 30 year old female with a preferred rate? Data Table Table 2 Premium Rates for Periods Less Period Percent of Annual Period Premium Semiannually 51.00 Quarterly 26.00 Monthly 8.75 Estimated Annual Life Insurance Premium Rates per $1,000 of Face Value 10-Year Level Term 20-Year Level Term Age Male Female Age Male Female PREF NIT PREF NTT PREF NTT PREF NTT 20 0.87 1.272.28 0.75 1.10 1.88...