They have determined that their annual income is $70,000 and their net worth is now $150,000. This method is called the non-working spouse method. If we really see it through the lens, probably the Non-working Spouse, as the life insurance industry calls it, has more of the work to do without getting paid as much as its office-going counterpart. Your spouse expects to continue to work after your death. In many cases, the answer is yes. the income provider's salary. E. 60 days. Expert Answer 100% (1 rating) Step 1 Non-working spouse method: This method is form of insurance coverage that allows you to s View the full answer Previous question Next question During the year, charges for tuition and fees were $244,500; scholarships were$16,300; and tuition waivers for scholastic achievement were $5,100. C. Retired couple with a pension. Is equipment floater the same as inland marine? 44. The policy terminates only after the sum assured on death or diagnosis of Terminal Illness of the second life, or on maturity of the policy term, thereafter. If you have a renewable term policy, A. Headquartered at 199 Broad Street, Red Bank NJ 07701-2056 Most participating policies are sold by: 102. Multiply the number of years until the youngest child reaches 18 by $10,000. $343,000 C. $490,000 D. $700,000 E. $750,000, 85. method, what should be your need for life insurance? Tim and Allison are married and have two children, ages 4 and 7. Another name for permanent life insurance is A. The spouse who has to stay at home, looking after the children, cooking, and supporting the family often has a more tiresome job to do, than the working spouse. The Tax Reform Act of 1986 A. D. The policy features. Work with our consultant to learn what to alter. The policy loan provision means that A. When deciding the right amount of coverage required for your spouse, everyones need may be different. With the right term insurance policy in place, stay prepared for any adversity. Mildred was diagnosed with terminal cancer and knows that she doesnt have long to live. Limited installment payment. Determine an estimated regression equation that can be used to predict the overall score given the score for Shore Excursions. f. include taxes, storage fees, and handling costs, Purchasing a life insurance policy is a basic and inexpensive task, Life insurance benefits may be used to pay off a home mortgage or other debts at the time of death, The sooner a person is likely to die, the lower the premiums he or she will pay, Life expectancy for men is longer than that for women, Life insurance is a wise purchase of all individuals, The "Nonworking" spouse method of estimating life insurance includes factors such as Social Security and liquid assets, The "Family Need" method of estimating life insurance includes factors such as social security and liquid assets, Decreasing term pays less to the beneficiary as time passes, The beneficiaries of someone who dies by suicide will never be eligible to receive any benefits from his or her life insurance policy, Competition among companies with comparable policies can affect the price a company charges for life insurance, An interest-adjusted index is a method evaluating the cost of life insurance by taking into accounting the time value of money, The lower the interest-adjusted index, the lower the cost for life insurance policy, If you change your mind about your insurance policy, you have 60 days to return it to receive a refund of your premium, The most common settlement option for a life insurance program is the lump-sum payment, If you switch life insurance policies, you will automatically still be insurable, Annuities are more attractive for people who expect to live only a short time, The earnings from an investments in an annuity is taxed the same as earnings from an investment in the certificate of deposit, An administrative fee of $150 per year may be deducted to cover record-keeping and other administrative expenses related to a variable annuity, When you buy life insurance, you are making a contract with the company issuing the policy where you agree to pay a premium periodically, If you have misplaced a life insurance policy, your state's insurance commission may be able to help you locate it, Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese, Fundamentals of Financial Management, Concise Edition. So to recap, you can not take out a life insurance policy on someone without their knowledge, and no one should be able to do it to you. As a member, you'll also get unlimited access to over 88,000 In this episode, John continues his series on the. \quad\text{With donor restrictions}&\underline{\text{\hspace{5pt}229,940}}\\ 1. Note: The categorization of Spouse into Working and Non-Working will be as per the Companys Board Approved Underwriting Policy (BAUP). B. Use Exhibit 1-B. Using the nonworking spouse method, what should be the life old? For a non-Working Spouse. d. 28. The rule of 70 and the rule of 72 give rough estimates of the number of years it would take for a certain variable to double. If marriage has taken place after the policy commencement date, you can add the Spouse to your policy within one year from the date of the marriage. There are many life circumstances you need to consider, but depending on your circumstances, there are different methods you can use to figure out your life insurance coverage requirement. Has the option to select any Coverage Option, any Optional In-Built Cover and any Benefit Payout Option at the stage of getting added for coverage under the policy. In other words, if a person's death would cause you significant financial hardship, it's an insurable interest. Under this plan option, a Monthly Survival Income shall be payable at the beginning of each month, starting from the Policy Anniversary coinciding with or following the Life Assured attaining age 60 years (last birthday) which shall continue till the end of the Policy Term or the death of the Life Assured whichever is earlier. 68. Jeff and Erica have two children. Under the Multiple of Income method of estimating, life insurance needs, what important factor is excluded, 98. In case of death of the Life Assured during the Policy Term, Sum Assured on Death basis the Coverage option opted, less cumulative monthly income(s) already paid shall be payable. 82. She has since died. Which of the following allows an individual to receive a fixed amount of income over a certain period of time, or over his or her life? 2. This method is meant for those with typical families where both spouses work, are in good health, with average debt, and with no more than three kids. Now, if it's just you and your spouse, you can use the DINK method. If you switch life insurance policies, you will automatically still be insurable, Annuities are most beneficial for individuals who expect to live only a short time, An investment in an annuity is the same as an investment in a certificate of deposit, Tuitionandfeesreceivable(netofdoubtfulaccountsof$12), Pledgesreceivable(netofdoubtfulaccountsof$280), Property,plan,andequipment(netofaccumulateddepreciationof$104,240), Investments(atfairvalue,costof$162,000), Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese, Fundamentals of Financial Management, Concise Edition. E. All of these affect the price. A. Easy method B. Dual income, no kids method C. Formal calculation method D. Nonworking spouse method E. Family needs method. False. If one should die, they think that funeral expenses would be $12,000. Lastly, it allows you to keep your future obligations: college, paying off debts, weddings, bar mitzvahs and bat mitzvahs, sweet sixteens, and all the other things that you want to do for your kids. We look forward to speaking with you. Fixed Annuities are long-term insurance products. D. Your premium will not increase when you renew it. Income replacement is one of the main reasons many people, especially those who have loved ones depending on them financially, have life insurance. Instruction$86,100 This method is called the non-working spouse method. Term insurance C. Whole insurance D. Variable annuity E. 401(k), 77. Allowed whole life insurance policies to be sold. A. 76. old? B. Collect premiums for the insurance contract. A. Term insurance for non-working spouse in India will be of great help. $196,000 C. $280,000 D. $400,000 E. $430,000, 83. Fred bought life insurance five years ago. Also, if you try to make up some of that yourself, you lose income and income potential. D. Decreasing term. E. Made all annuities tax free. Which of the following life insurance policies should she apply for? Annuities are often purchased for A. Futures Contract in Finance Purpose & Examples | What Are Futures? Sum Assured as chosen by the Working Spouse under the Plan. Which method are they using to determine their life insurance needs? They plan to purchase life insurance using this formula: (18 - Youngest child's age) $10,000. A. Adjustable life B. Using time value of money and assuming you could invest your E. It is better to fund an IRA, Keogh, or 401(k) before buying an annuity. Then compute this number as an annual cost and multiply by the approximate number of years you would need those services, say until your children start going to college, or until you retire to take care of the house yourself. Life Insurance Underwriting \text{Cash and cash equivalents}&&\text{\$\hspace{18pt}734}\\ About ___ of the U.S. life insurance companies are stock companies. money elsewhere for a 7 percent annual yield, calculate the net cost of insurance. C. The policy will return all premiums if you survive to the end of the policy. The timing for payments of a variable annuity are variable. Limited installment payment. Features of Life Insurance Suppose that yours is a typical family. Life insurance policies, even joint policies, are rated based on your age, health conditions and coverage amount. This method has you multiplying your annual gross income by 70% and then multiplying that by 7. A. Adjustable life B. Non-Working Spouse Method. This is a method that has you adding half of all your debts plus funeral expenses. 47. But from a financial perspective, it does not have to be a crisisif you have good planning. E. Proceeds left with the company. What is a Rider on a Life Insurance Policy? With an available asset of $500,000 in savings, your life insurance requirement is $1,355,000 - $500,000 = $855,000. \text{Investments (at fair value, cost of \$162,000)}&&\underline{\text{\hspace{5pt}158,400}}\\ Life Insurance This is a method that has you multiplying the number of years it takes the youngest child to reach 18 by $10,000. You have a spouse, two kids, a dog and a mortgage - a typical family. Steiner Colleges statement of financial position for the year ended June 30, 2019, is presented here. \end{array} Using the nonworking spouse method, what should be the life insurance needs for a This method is used only to calculate child care needs, not the total financial needs of the family. b. the number of each item you have in stock \text{Tuition and fees receivable (net of doubtful accounts of \$12)}&&\text{230}\\ Can you get life insurance on a spouse? Using the "nonworking" spouse method, what should be the life insurance need for a family whose youngest child is 10 years old? For example, if your gross income is $65,000, then with the easy method, your life insurance requirement is ($65,000 0.7) 7 = $318,500. All other trademarks and copyrights are the property of their respective owners. E. All of these. d. a way of shipping goods to customers A. In this case, the only type of life insurance policy you can buy is a guaranteed issue policy. is =1.25\sigma = 1.25=1.25. Sell you the highest level of coverage available. The second is the DINK method. A. The sooner a person is likely to die, the lower the premiums he or she will pay. Life insurance companies do realize that taking care of the house is an equally important as earning an income for the household. Collections on Tuition and Fees Receivable totaled$222,600. C. Administrative fee. Prepare journal entries in good form to record the foregoing transactions for the year ended June 30, 2020. Which of the following policies would meet her needs? Question: Problem 12-10 Using the "Nonworking" Spouse Method to Determine Life Insurance Needs [LO12-2] Tim and Allison are married and have two children, ages 16 and 17 . Variable life C. Universal life D. Adjustable life E. Decreasing term life. Whole life B. Renewable term C. Convertible term D. Decreasing term E. Multiyear level. Which of the following riders would allow her to receive cash now? We want to help you with that. A. Accidental death benefit C. Guaranteed insurability option D. Cost-of-living protection E. Accelerated benefits, 63. Both you and the spouse are covered throughout the policy term for your respective separate sums assured. Easy method C. DINK method D. Family need E. Soccer mom 95. D. Insurer. 93. Allison is a "nonworking" spouse who devotes all of her time to household activities. $18,000 C. $50,000 D. $130,000 E. $180,000, 84. Life insurance benefits may be used to pay off a home mortgage or other debts at the time of death. You are a dual-income, no-kids family. $140,000 B. 45. C. Identified annuities to be the same as certificates of deposit. He has since died. Group life C. Limited life D. Universal life E. Variable life, 51. I would definitely recommend Study.com to my colleagues. Multiply the income . Jeanne wants to purchase a life insurance policy with guaranteed premiums. Here's how to calculate the estimated life insurance need: 1. Allison is a "nonworking" spouse who devotes all of her time to household activities. C. Temporary insurance. Your premium may increase if you continue it for another term because you will be older. 48. 80. An error occurred trying to load this video. What happens if you don't pay your health insurance deductible? The total debts of you and your spouse include the following: mortgage, $200,000; auto loan, $16,000; credit card balance, $2,000; and personal debts of $4,000. Using the nonworking spouse method, what should be the life age 35 may expect to live. Tim and Tammy are updating their financial plan and are concerned that they might not have enough life insurance coverage for their family, which includes two children, ages 4 and 10. The settlement option in which the company acts as trustee and pays interest to the beneficiary is called A. Lump-sum payment. Steiner is a private college. You estimate that funeral expenses will be $5,000. The question is, how big are yours? STEINERCOLLEGEStatementofFinancialPositionJune30,2019(amountsinthousands)\begin{array}{c} The rule of 70 is a calculation to determine how many years it'll take for your money to double given a specified rate of return. A. Catherine Carey has made the choice to stay home and raise her three kids while her husband works. Term insurance C. Whole life insurance D. Variable annuity E. 401(k). 39. succeed. For example, say. One of the most common questions we hear is, Can my non-working spouse qualify for life insurance? The answer is yes! Step 1 Non-working spouse method: This method is form of insurance coverage that allows you to s. The maturity benefit is Rs. It also collected $820 of Pledges Receivable that were unrestricted. This method has you multiplying your annual gross income by 70% and then multiplying that by 7. C. Individual retirement accounts (IRAs). nonworking spouse whose youngest child is 5 years old? Enrolling in a course lets you earn progress by passing quizzes and exams. 74. The death benefit will be increased by the amount of an outstanding policy loan. Your premium will not increase when you renew it. 24. A. Related to the expenses incurred: prepaid assets of $534 were used,$4,776 of the expenses were accrued, and the remaining expenses were paid. 36. Todd plans to purchase a life insurance policy from a stock life insurance company. It accumulates cash value. A. '`Wb L@b[[s8M,I=s:sr<3Y=w0&)_f& (_X>pO&|`r;ZXeEP4DDi_/%"M{s1&E^}W>f,Kc,$vt ls-`p]s+>hBQ/nmBNO`majcNz@vr2LvDZ \NTef9F+ STEINERCOLLEGEStatementofFinancialPositionJune30,2019(amountsinthousands), AssetsCashandcashequivalents$734Short-terminvestments7,666Tuitionandfeesreceivable(netofdoubtfulaccountsof$12)230Pledgesreceivable(netofdoubtfulaccountsof$280)5,872Prepaidassets1,364Property,plan,andequipment(netofaccumulateddepreciationof$104,240)281,404Investments(atfairvalue,costof$162,000)158,400Totalassets$455,670LiabilitiesandNetAssetsLiabilities:Accountspayableandaccruedliabilities$21,130Depositsheldincustodyforothers700Unearnedrevenue900Bondspayable99,000Totalliabilities127,730Netassets:Withoutdonorrestrictions$104,000Withdonorrestrictions229,940Totalnetassets333,940Totalliabilitiesandnetassets$455,670\begin{array}{lrr} It is important to replace all of the income lost when an employed family member dies when using the human-life approach. For example, your life insurance coverage amount will need to pay for funeral expenses, any outstanding debts, any remaining mortgage, and maybe even future financial support for a spouse or children. E. Child. The DINK method has you adding half of all your debts to your funeral expenses. 401(k) plans. Life expectancy for men is longer than that for women. Net deposits returned to students totaled $10. Under this method, the original principal that you save will still remain at the end of the income period. The income replacement approach is a method of determining the amount of life insurance you should purchase. D. A fixed annuity is one where the investments made into the annuity are variable. The premium shall be adjusted on the due date even if it has been received in advance. D. Term. U ^s1xRpbD#rYNrJC.aeD=U]Sik@X6G[:b4(uH%-+0A?t>vT9. Let's review. Diffusion Let us complete them for you. \textbf{Statement of Financial Position}\\ If you are a family and either you or your spouse stays home with the children, it is most likely that only the working souse has life insurance coverage because thats the case with most families in our country. With comprehensive coverage features like accidental benefit, increasing/ decreasing cover and whole life cover, the policy also offers a Spouse cover. Buying from a financially strong company B. \text{Pledges receivable (net of doubtful accounts of \$280)}&&\text{5,872}\\ The following transaction information (amounts in thousands) pertains to the year ended June 30, 2020. Further, you estimate that your funeral will cost $6,000. 4.Tax benefit of Rs. Focus on Personal Finance: Online Textbook Help, Life Insurance Companies: Definition & Types, Psychological Research & Experimental Design, All Teacher Certification Test Prep Courses, How to Estimate Life Insurance Requirements. E. Your premium will be higher than a whole life policy premium. A. Fixed annuity B. 3 days. Try refreshing the page, or contact customer support. 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You own a home with a mortgage of $110,000, and All guarantees are based on the continued claims paying ability of the issuing company. Best Investment Options in India A. Waiver of premium disability benefit B. Which of the following statements is correct? Use the easy method to determine how much insurance she should carry. And a term insurance cover for house makers, non-working spouses, or say a housewife, proves helpful exactly here, ensuring your family tides over the financial damages in case something unfortunate happens. Purchasing a life insurance policy is a basic and inexpensive task. E. A policy whose coverage stops after a period of time. You may not purchase insurance once your term ends. Which of the following policies should she buy? You may need to change your coverage amounts when this happens. But from a financial perspective, it does not have to be a crisisif you have good planning. 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You'll get a detailed solution from a subject matter expert that helps you learn core concepts. - Definition & Examples, Strategies for Effective Consumer Relations, Cross-Selling in Retail: Techniques & Examples, Working Scholars Bringing Tuition-Free College to the Community. 2,10,000, (excluding taxes) premium payment term 10 years and policy term 20 years. Which statement is correct regarding mutual life. DINK stands for double income, no kids. A. Waiver of premium disability benefit B. E. An insurance company will calculate the annual amounts to pay each person for an annuity. Which of the following is NOT temporary insurance? B. The last thing to realize is that calculating your life insurance needs can be tricky. It equals the cost of replacing the property. Whole life B. AssetsCashandcashequivalentsShort-terminvestmentsTuitionandfeesreceivable(netofdoubtfulaccountsof$12)Pledgesreceivable(netofdoubtfulaccountsof$280)PrepaidassetsProperty,plan,andequipment(netofaccumulateddepreciationof$104,240)Investments(atfairvalue,costof$162,000)TotalassetsLiabilitiesandNetAssetsLiabilities:AccountspayableandaccruedliabilitiesDepositsheldincustodyforothersUnearnedrevenueBondspayableTotalliabilitiesNetassets:WithoutdonorrestrictionsWithdonorrestrictionsTotalnetassetsTotalliabilitiesandnetassets$104,000229,940$7347,6662305,8721,364281,404158,400$455,670$21,13070090099,000127,730333,940$455,670. Beneficiary. Easy method B. Dual income, no kids method C. Formal calculation method D. Nonworking spouse method E. Family needs method, 29. You can take out a life insurance policy on your spouse if you have an insurable interest. Protect the people who depend on the insured from financial losses caused by his or her death. Fred bought life insurance when he was 47, although he told the insurance company that he was 42. \textbf{Assets}\\ What are the stages of the General Adaptation Syndrome (GAS)? \textbf{(amounts in thousands)}\\ Can I stay on my parents insurance if I file taxes independently? 96. How to estimate life insurance requirements for a non working spouse? C. Her contingent beneficiaries. method for him to use to calculate his insurance needs? This gives you seven years of wages at 70%. Pam just started working at XYZ Widget Company and finally wants to get insurance coverage. A. The provisions of Income Tax Act, 1961 are subject to amendments made by the government from time to time. 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If you mean you want to add life insurance coverage for your new spouse on your life insurance policy, you can contact your life insurance agent or carrier and request what it would cost to add a spouse rider for life insurance coverage to your existing policy. Allison is a "nonworking" spouse who devotes all of her time to household activities. 38. The process standard deviaton A. Catherine Carey has made the choice to stay home, and raise her three kids while her husband works. Adult child living with parents. Cash value. Cross), Campbell Biology (Jane B. Reece; Lisa A. Urry; Michael L. Cain; Steven A. Wasserman; Peter V. Minorsky), Psychology (David G. Myers; C. Nathan DeWall), The Methodology of the Social Sciences (Max Weber), Civilization and its Discontents (Sigmund Freud), Principles of Environmental Science (William P. Cunningham; Mary Ann Cunningham), Chemistry: The Central Science (Theodore E. Brown; H. Eugene H LeMay; Bruce E. Bursten; Catherine Murphy; Patrick Woodward), Give Me Liberty! insurance needs using the DINK method. PK ! was specifically designed for someone in her situation? loans. 5% B. B. E. Cash value life. Life insurance companies understand that taking care of the home is invaluable and is equally important as earning an income for the household. B. $13,000 B. Estimate your total B. Multiyear level term. B. In this case, 18 years. NOT FDIC INSURED. B. Accidental death benefit C. Guaranteed insurability option D. Cost-of-living protection E. Accelerated benefits, 61. 37. If you find the policy or discover paperwork that indicates a policy exists, contact the insurer. You can convert your policy from permanent to term at any time. D. 30 days. Accidental death benefit C. Guaranteed insurability option D. Cost-of-living protection E. Accelerated benefits, 62. E. Convince you to buy the policy that will pay her the highest commission. [Content_Types].xml ( Y0}GM What is the amount of life insurance they should carry using the "nonworking" spouse method? How much term does a non-working spouse get? Carton is 0.75 m by 0.6 m by 0.8 m. You are the wage earner in a typical family, with $55,000 gross annual income. Fixed annuity B. Use the multiple of income method to The Policy will terminate after payment of this benefit. D. An annuity is more advisable for people in poor health than for those who are likely to live longer than average. 'QP2?^03dw 6x ;!;RTkz}Sc;)iI A.M. Best. C. Final life payment. Which of the following riders provided an additional benefit for his heirs? Which of the following is NOT a type of permanent insurance? refunds of$11,200 were given. \quad\text{Accounts payable and accrued liabilities}&&\text{\$\hspace{5pt}21,130}\\ C. Decreasing term. \qquad\text{Total net assets}&&\underline{\text{\hspace{5pt}333,940}}\\ When using the rule of 70, the number 70 is used in the calculation. They own a home with a $125,000 mortgage; they owe $25,000 for their car loans and have $22,000 in student loans.