1.) You have a gross annual income of $74,000. Use the multiple of income method to determine the maximum amount of life insurance you should carry.

Maximum insurance needed?

2.) Suppose that yours is a typical family. Your annual income is $68,000. Using the easy method, what should be your need for life insurance?

Life insurance needed?

3.) You are a dual-income, no-kids family. You and your spouse have the following debts:

Mortgage = $244,000; Auto loan = $19,600; Credit card balance = $2,400; and other debts = $6,640. Further, you estimate that your funeral will cost $5,000. Your spouse expects to continue to work after your death. Using the DINK method, what should be your need for life insurance?

Total insurance needed?

4.) Using the nonworking spouse method, what should be the life insurance needs for a nonworking spouse whose youngest child is 15 years old?

Life insurance needed?

5.) Allen has purchased a whole life policy with a death benefit of $220,000. Assuming that he dies in 8 years and the average inflation has been 2 percent, what is the value of the purchasing power of the proceeds?

Purchasing power of proceeds?

6.) Suppose you are 30 and have a $70,000 face amount, 20-year, limited-payment, participating policy (dividends will be used to build up the cash value of the policy). Your annual premium is $630. The cash value of the policy is expected to be $2,800 in 20 years. Using time value of money and assuming you could invest your money elsewhere for a 7 percent annual yield, calculate the net cost of insurance.

Net cost of insurance?

7.) Your variable annuity has a mortality and expense risk charge at an annual rate of 1.25 percent of account value. Your average account value during the year is $30,000. What are your mortality and expense risk charges for the year?

Mortality and expense risk charges?

8.) Your variable annuity charges administrative fees at an annual rate of 0.10 percent of account value. Your average account value during the year is $60,000. What is the administrative fee for the year?

Administrative Fee