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11/30/2016 Take Test: 230Homework#10 - Fall 2016FIN 230... Take Test: 230Homework#10 Test Information Description Respondus Instructions Timed Test This test has a time limit of 1 hour.This test will save and submit automatically when the time expires. Warnings appear when half the time, 5 minutes, 1 minute, and 30 seconds remain. Multiple Attempts This test allows 2 attempts. This is attempt number 1. Force Completion This test can be saved and resumed at any point until time has expired. The timer will continue to run if you leave the test. Save All Answers Q U EST I O N 1 Close Window Save and Submit 1 points Saved Based on the 2001 CSO Mortality Table in the "Course Content" folder on Compass, what is the expected average age of death for a 20yearold female? Round to the nearest year (whole number). 81 Q U EST I O N 2 1 points Saved Based on the 2001 CSO Mortality Table in the "Course Content" folder on Compass, how many 20 yearold females per 100,000 will die during the year? (Round to nearest whole number with no commas.) 47 Q U EST I O N 3 1 points Saved Based on the CSO Mortality Table in the "Course Content" folder of Compass, what is the COI for a 32yearold female with a $10,000 life insurance policy? (Round to nearest cent with no commas or dollar sign.) 7.7 Q U EST I O N 4 1 points Saved A 30 year old female purchases a $250,000 whole life policy for an annual premium of $2,000. After 20 years the policyholder dies and the insurer pays $250,000 to the primary beneficiary. https://compass2g.illinois.edu/webapps/assessment/take/launch.jsp?course_assessment_id=_81570_1&course_id=_25498_1&content_id=_2356771_1&step=null 1/9 11/30/2016 Take Test: 230Homework#10 - Fall 2016FIN 230... years the policyholder dies and the insurer pays $250,000 to the primary beneficiary. If the primary beneficiary is in the 28% tax bracket, how much will the beneficiary pay in taxes? (Round to nearest dollar with no commas or dollar sign.) 0 Q U EST I O N 5 1 points Saved A 30yearold female purchased a $250,000 whole life policy for $4,000 a year. She receives dividends of $25,000 over time. At age 60, she surrenders the policy for $125,000. If this individual is in the 28% tax bracket at that point, how much does she have to pay in taxes when she surrenders this policy? Round to nearest dollar with no commas or dollar sign. 8400 Q U EST I O N 6 1 points Saved You have a life insurance policy with a cash value of $20,000 at the end of 2011. At the beginning of 2012, you pay a premium of $5,000. The annual interest rate is 5%. At the end of the year, you withdrew $1,000. Mortality charges were $500 for the year. The expense charges are $5 per month. Mortality and expense charges are assessed at the end of the year. What is the cash value of this life Remai ni ng Ti me: 54 minutes, 43 seconds. insurance at the end of 2012? Round to nearest dollar with no commas or dollar sign. Question Completion Status: 24690 Q U EST I O N 7 1 points Saved Alvin purchased a universal life insurance policy at the age of 35. He is now 43 years old and at the end of the eighth year of the policy. The policy was sold with a face amount is $100,000 and death benefit option 1 and a planned premium of $1,500 per year which Alvin has paid. At the beginning of year 8, the cash value of the policy was $7,800 and it grew by $1,000 during the year. The policy was credited with a $1,100 dividend. If Alvin purchased an annual renewable term policy now, it would cost him $400 for $100,000 of coverage. Based on Yearly Rate of Return, what is the return on Alvin's policy during the eighth year? Omit percent sign. 10.37 Q U EST I O N 8 1 points Saved Davis dies leaving his wife a $500,000 life insurance policy death benefit. The wife elects to take the $500,000 as a tenyear period certain annuity and receives $52,430 per year. Which part of the payment is taxable income to Davis' wife? none of it only the $500,000 death benefit $ 52,430 per year $ 2,430 per year none of the above Q U EST I O N 9 1 points Saved https://compass2g.illinois.edu/webapps/assessment/take/launch.jsp?course_assessment_id=_81570_1&course_id=_25498_1&content_id=_2356771_1&step=null 2/9 11/30/2016 Take Test: 230Homework#10 - Fall 2016FIN 230... Q U EST I O N 9 1 points Saved John Doe buys a life insurance policy and names his wife, Jane Doe, as the primary beneficiary. He names son, Jack, as the contingent beneficiary. One night, they forget to turn off the gas on the stove, and while sleeping, something sparks and blows the house up. Both tragically die in the fire/explosion. Jack was away at college on the night of their death. It its unknown who died first. The death benefit of John's policy is paid to John's estate. Jane's estate. Jack. The benefit is not paid out. The insurer holds the benefit until the courts decide. None of the above. Q U EST I O N 1 0 1 points Saved Remai ni ng Ti me: 54 minutes, 43 seconds. John & Jane Doe (husband & wife) each have a life insurance policy that names the other as a direct beneficiary and there are no contingent beneficiaries or further payees listed in either policy. John and Jane are involved in car accident and both are dead when the paramedics arrive. The death benefit Question Completion Status: from both policies are paid to John's estate Jane's estate Each estate in equal parts The insurance company cannot pay the death benefit None of the above Q U EST I O N 11 1 points Saved Which of the following policies would have the lowest first year premium for a 25yearold male? 10year level term Straight Whole Life Whole life paid up at 65 Universal life Annual renewable term Q U EST I O N 1 2 1 points Saved Which of the following policies would have the highest first year premium for a 25yearold male? 10year level term Straight Whole Life https://compass2g.illinois.edu/webapps/assessment/take/launch.jsp?course_assessment_id=_81570_1&course_id=_25498_1&content_id=_2356771_1&step=null 3/9 11/30/2016 Straight Whole Life Take Test: 230Homework#10 - Fall 2016FIN 230... Whole life paid up at 65 5year level term Annual renewable term Q U EST I O N 1 3 1 points Saved Which of the following policies purchased at age 35 would provide the highest cash value at age 65? whole life policy. paid up at 65 life policy. term insurance to age 65. twenty payment life policy. they would all have the same cash value at age 65. Remai ni ng Ti me: 54 minutes, 43 seconds. Q U EST I O N 1 4 Question Completion Status: 1 points Saved Which of the following do ALL permanent life insurance policies offer that term life insurance policies do not? I. Level premiums II. Cash values III. Taxsheltered investment vehicles IV. Permanent death protection V. Taxfree death benefits to beneficiaries II, III, and IV only. IV only. I, II, III, IV, and V. II, III, IV, and V only. I, II, and IV only. Q U EST I O N 1 5 1 points Saved Minnie buys a whole life insurance on August 1, 1995. Minnie names her best friend, Pluto, as her primary beneficiary. She has paid the yearly premium of $1,533 every year. But Minnie, who likes to think she is still young, stated on the application that she was 35 instead of 45. If Minnie passes away on September 7, 2011, what will the insurance company do when they find out that Minnie is 57 instead of 47? Pay Pluto the full death benefit because the two year contestability period is past. Refuse to pay the death benefit because Minnie blatantly lied on her application. Pay Pluto the accrued premium plus interest due to misrepresentation. Adjust the death benefit to account for the actual age of Minnie, accounting for the premiums she paid. https://compass2g.illinois.edu/webapps/assessment/take/launch.jsp?course_assessment_id=_81570_1&course_id=_25498_1&content_id=_2356771_1&step=null 4/9 11/30/2016 paid. Take Test: 230Homework#10 - Fall 2016FIN 230... Transfer the policy to Pluto, as he is the primary beneficiary and becomes the insured if the policy is contested. None of the above. Q U EST I O N 1 6 1 points Saved The following are life insurance loads, except for Surrender charge Mortality expense Cash value Administration fee Expense charges Remai ni ng Ti me: 54 minutes, 43 seconds. Q U EST I O N 1 7 1 points Question Completion Status: Life insurance contracts receive favorable tax treatment in that Saved all proceeds to the beneficiary are not usually taxable as income. tax on investment gains is deferred until the gain is realized. the investment earnings on the cash value are not taxed during the period of accumulation. in computing taxable gain, the insured may deduct all the premiums paid and the cost of insurance. all of the above. Q U EST I O N 1 8 1 points Saved Which one of the following statements best describes a "twentypayment" life policy (20 annual payments)? payment of the face amount at the end of 20 years. payment of the death benefit only if death occurs during the 20 year period. payment of premiums only during the 20 year period. payment of the cash value and the face amount if death occurs during the 20 year period. none of the above. Q U EST I O N 1 9 1 points Saved The three primary elements in life insurance ratemaking are costs, profits and taxes. https://compass2g.illinois.edu/webapps/assessment/take/launch.jsp?course_assessment_id=_81570_1&course_id=_25498_1&content_id=_2356771_1&step=null 5/9 11/30/2016 Take Test: 230Homework#10 - Fall 2016FIN 230... costs, profits and taxes. mortality, loading and expenses. interest, mortality, and loading. mortality, expenses, and profits. interest, mortality, and profits. Q U EST I O N 2 0 1 points Saved Mr. Jones purchased a $50,000 whole life policy with double indemnity on June 1, 2012. On June 25, 2014, Jones committed suicide. The insurer will be required to pay $50,000. $100,000. only the premiums which Jones has paid to the company. the premiums paid plus interest on those premiums. Remai ni ng Ti me: 54 minutes, 43 seconds. the company will not be required to pay anything. Question Completion Status: Q U EST I O N 2 1 1 points Saved 1 points Saved 1 points Saved To reinstate a policy that has lapsed, the insured must pay all past due premiums plus interest. provide evidence of insurability. reinstate the policy within the reinstatement period. pay or reinstate any indebtedness under the policy. all of the above. Q U EST I O N 2 2 A collateral assignment of a life insurance policy is often used to transfer all ownership rights to an assignee. provide security for a loan. change irrevocable beneficiary designations. avoid reducing the benefits payable to the beneficiary. none of the above. Q U EST I O N 2 3 https://compass2g.illinois.edu/webapps/assessment/take/launch.jsp?course_assessment_id=_81570_1&course_id=_25498_1&content_id=_2356771_1&step=null 6/9 11/30/2016 Take Test: 230Homework#10 - Fall 2016FIN 230... One of the most attractive features of the loan values under permanent forms of life insurance is the fact that the loans are interest free. such loans do not have a fixed repayment requirement. the loans do not have a fixed repayment requirement and are interest free. funds are available without delay upon request by the insured. loans do not have to be repaid if the insured dies while the loan is outstanding. Q U EST I O N 2 4 1 points Saved Under the Uniform Simultaneous Death Law, how is a life insurance policy paid if the insured and the primary beneficiary die in the same accident and there is no evidence as to who died first? the court must determine who is entitled to the proceeds. the policy is settled as though the insured survived the beneficiary. Remai ni ng Ti me: 54 minutes, 43 seconds. the policy is settled as though the beneficiary survived the insured. Question Completion Status: the proceeds are divided between the insureds estate and the beneficiary's estate. there is no payment because there is no beneficiary. Q U EST I O N 2 5 1 points Saved If an individual wanted to purchase a life insurance policy that provided both death protection and a taxsheltered investment, which type(s) of life insurance would best suit his or her needs? IVariable universal life IIUniversal life IIIReentry term IV10year level term VStraight whole life I and II II and V III and IV I, II, and V III, IV, and V Q U EST I O N 2 6 1 points Saved If an individual wanted to purchase a life insurance policy that provided death protection with the lowest premium, which type(s) of life insurance would suit his or her needs the best? IVariable life IIUniversal life IIIEndowment life IVYearly renewable term VStraight Whole life https://compass2g.illinois.edu/webapps/assessment/take/launch.jsp?course_assessment_id=_81570_1&course_id=_25498_1&content_id=_2356771_1&step=null 7/9 11/30/2016 Take Test: 230Homework#10 - Fall 2016FIN 230... VStraight Whole life I IV III and IV I, III, and IV III, IV, and V Q U EST I O N 2 7 1 points Saved "Viatical settlement" refers to the sale of a terminally ill person's life insurance policy. artificial impoverishment to become eligible for Medicaid. payments to the IRS by a life insurance company. Remai ni ng Ti me: 54 minutes, 43 seconds. the taxation of surrendered life insurance policies. none of the above. Question Completion Status: Q U EST I O N 2 8 1 points Saved Adjustable life policies are called "adjustable" because the face of the policy changes with changes in a price index. the insured may vary the premium over the life of the policy. the amount of insurance may be adjusted over time. both the amount of insurance and premium are adjustable over the life of the policy. none of the above. Q U EST I O N 2 9 1 points Saved Variable life insurance contracts are subject to SEC regulation rather than regulation by the individual states. are considered life insurance and are exempt from securities regulation. are also referred to as "adjustable life and premium" insurance contracts. are considered securities and can only be sold by licensed securities agents. none of the above. Q U EST I O N 3 0 1 points Saved https://compass2g.illinois.edu/webapps/assessment/take/launch.jsp?course_assessment_id=_81570_1&course_id=_25498_1&content_id=_2356771_1&step=null 8/9 11/30/2016 Q U EST I O N 3 0 Take Test: 230Homework#10 - Fall 2016FIN 230... 1 points Saved Special mortality tables are used for annuities because: people who buy annuities are usually from poorer economic classes and have a higher mortality rate. annuitants are a select group of risks that generally live longer than purchasers of life insurance. higher expenses are associated with issuing annuities than with issuing life insurance policies. life insurance mortality tables are inaccurate at the older ages when most annuities are sold. none of the above. Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answers Close Window Save and Submit Remai ni ng Ti me: 54 minutes, 43 seconds. Question Completion Status: https://compass2g.illinois.edu/webapps/assessment/take/launch.jsp?course_assessment_id=_81570_1&course_id=_25498_1&content_id=_2356771_1&step=null 9/9