Financial Services _Ã‡Ã´ Client Services RFC121 Lecture Notes - Life Insurance, Term Life Insurance

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greenmuskrat329

5 Jun 2018

School

Seneca College

Department

Financial Services _Ã‡Ã´ Client Services

Course

Financial Services _Ã‡Ã´ Client Services RFC121

Professor

Peter Wan

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Types of Life Insurance Policies

▪ Upon death face value of policy paid out to named beneficiary

▪ Permanent life insurance has the following variables;

 Whole Life

• pays specified premiums as long as he/she lives

• Pays stipulated sum to beneficiary upon death

• Has a cash value which is paid out if policy given up

Types of Life Insurance Policies

2. Universal Life Policy

▪ Combines term insurance and investment elements

▪ Can pay variable premium amounts

▪ Increased cash value reflects interest earned; guaranteed not to be

less than specific amount

▪ Uses current interest rates and can be changed to reflect prevailing

rate changes

▪ Death benefits flexible

▪ Can change premium without changing coverage

Types of Life Insurance Policies

3. Variable Life Policy

▪ Premiums guaranteed

▪ Case value equals performance of investment fund or other index

▪ Minimum death benefit guaranteed but can increase

▪ Risk of poor investments

4. Endowment Life Insurance

▪ coverage from beginning of contract to maturity

▪ guarantees payment of specified sum even if insured still alive

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Related Questions

1). All of the following statements are false except

an investment bank is a financial firm that assists organizations in raising funds.

a corporation often deposits excess cash in an investment bank.

an investment bank provides checking services for large corporations.

most investment banks help investors buy and sell a corporation's stock.

under current laws, an investment bank provides services to individuals but cannot provide banking services to corporations.

2). (TCO 5) Dave Harris has just purchased a bond with a face value of $1,000 that pays 6%. The purchase price of the bond was $900, and the bond will mature in 5 years. What is the yield to maturity for this bond?

9.8%

3) (TCO 5) A characteristic of serial bonds is that they

will pay no interest payments.

will have varying issue dates.

will have a series of maturity dates.

cannot be called.

will all mature 10 years from the date of issue.

4).

(TCO 3) All of the following are disadvantages of leasing a vehicle except

automatic ownership interest in the car.

unlimited mileage on the car.

no need to meet credit requirements.

lease payments are likely to be lower than loan payments.

All of the other answers are advantages.

5). (TCO 4) John Brown owns a home in Oakland, California and because of the risk of earthquakes, he decides to purchase _____ to cover potential losses.

building and other structures

additional living expenses

personal property

personal liability

specialized coverage

6). (TCO 4) If Mark Wright obtains a permanent disability as a result of an injury on the job, most likely he will receive _____ as a source of disability income.

his employer

Social Security

worker's compensation

an individual insurance policy

his health insurance policy

7). (TCO 4) A(n) _____ is a document attached to an insurance policy that modifies coverage by adding or deleting a specified condition.

rider

waiver of premium

automatic premium loan

beneficiary

incontestability clause

8). (TCO 6) The Capitalist Mutual Fund's net asset value is $28.25. The fund has liabilities of $3 million and 1,600,000 shares have been issued. What is the value of the fund's portfolio?

9). (TCO 6) A benefit associated with an investment in a real estate limited partnership is that the investor

does not have to worry about capital gains tax.

does not have to pay federal income tax.

does not have to pay state income tax.

can invest in a shopping center or large building by investing as little as $5,000.

faces an investment that is very liquid.

10) (TCO 6) Chuck owns a home worth $140,000, a car valued at $30,000, and miscellaneous assets worth $7,500. He owes $75,000 on the home and $12,000 on the car, and has no other debts. His retirement account, in which he is fully vested, contains $17,500 in mutual funds. He is insured with a $250,000 term life insurance policy. What is his net worth?

11). (TCO 7) Brenda wants to leave a message of encouragement to her grandchildren just in case something happens to her in the near future. She would be interested in preparing a(n)

ethical will.

durable power of attorney.

letter of last instruction.

codicil.

formal will.

12). (TCO 7) Marion would be acting in the capacity of a(n) _____ if she is selected to manage the assets of her 16-year-old niece until the niece reaches the age of 21.

Financial Services _Ã‡Ã´ Client Services RFC121 Lecture Notes - Life Insurance, Term Life Insurance

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