Question
QUESTION 1 A variable annuity contract can be defined as a contract in which the insurance company varies the annuity payments based on the net
QUESTION 1
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A variable annuity contract can be defined as a contract in which the insurance company varies the annuity payments based on the net income of the insurance company. If the net income of the insurance company increases, then the annuity payments associated with a variable annuity contract will increase.
True
False
QUESTION 2
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Your plan is to retire in 50 years. At that point you will be 70 years old. You expect to live until you are 90. If your wealth at age 50 is $400 ,000 what is the maximum you can spend each year so that when you are 90 your wealth is $50,000. Assume that your wealth will earn 6% per year between your age of 70 and age of 90.
The answer is between $36,000 and $37,000 per year.
True
False
QUESTION 3
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I have a $300,000 mortgage. I have two young children who go to school in the neighborhood. My salary is the only source of family income. It would not make sense for me to buy a million-dollar life insurance policy because if I die, my wife can sell our house and move to a smaller apartment and go back to working as a corporate lawyer.
True
False
QUESTION 4
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In general, level term life insurance is high-benefit coverage you buy for a set period of time. Premiums are typically lower than for permanent insurance such as universal life policies.
True
False
QUESTION 5
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The death benefits an insurance company pays out are financed from returns on the companys investments. If the returns an insurance company can earn on its investments is expected to be relatively low, then managers of the firm will have to charge higher insurance premiums to compensate for the lower expected returns.
True
False
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