Joel and Trish are married, have two children, and recently bought a house. Trish has stable...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Joel and Trish are married, have two children, and recently bought a house. Trish has stable employment with above average income and excellent group benefits including 3 times annual salary life insurance. Joel is successful working at home as a self-employed contractor. The couple has a large mortgage and cash flow is a concern, but they want to keep the home should Joel die early. They want the most cost effective coverage and are considering Decreasing Term Insurance to cover the mortgage. Which of the following is true about this product? Decreasing Term is cost effective since the premium decreases, matching the need with cash flow as time passes. Even though Decreasing Term has a declining death benefit and premiums are level, it is cost effective because the decrease is factored into the mortality cost. Decreasing Term is cost effective because at each renewal option the subsequent term is shorter, and this reduced risk is factored into the mortality cost. Even though Decreasing Term has a declining death benefit, the premiums also decline, so the cash flow matches the coverage amount, making it cost effective. Joel and Trish are married, have two children, and recently bought a house. Trish has stable employment with above average income and excellent group benefits including 3 times annual salary life insurance. Joel is successful working at home as a self-employed contractor. The couple has a large mortgage and cash flow is a concern, but they want to keep the home should Joel die early. They want the most cost effective coverage and are considering Decreasing Term Insurance to cover the mortgage. Which of the following is true about this product? Decreasing Term is cost effective since the premium decreases, matching the need with cash flow as time passes. Even though Decreasing Term has a declining death benefit and premiums are level, it is cost effective because the decrease is factored into the mortality cost. Decreasing Term is cost effective because at each renewal option the subsequent term is shorter, and this reduced risk is factored into the mortality cost. Even though Decreasing Term has a declining death benefit, the premiums also decline, so the cash flow matches the coverage amount, making it cost effective.
Expert Answer:
Answer rating: 100% (QA)
The correct choice is b Something or someone who is considered to be of high... View the full answer
Related Book For
Taxation of Individuals 2017
ISBN: 9781259548666
8th edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
Posted Date:
Students also viewed these accounting questions
-
Calculate the Valuation of a company (except for banking and non-banking financial firms) of your choice using a two-stage growth FCFF model preferably listed on the National Stock Exchange (NSE)....
-
Group term life insurance and group universal life insurance have different characteristics and objectives. Compare (1) group term insurance with (2) group universal life insurance with respect to...
-
A couple plan to have two children and want to know the probability of having one boy and one girl. (a) Does {0, 1, 2} represent an equiprobable sample space for finding the probability of exactly...
-
Explain how the stockholders of a company hold an implicit put option written by the creditors?
-
Delivery Service purchased a commercial umbrella policy with a $10 million liability limit and a $100,000 self-insured retention. The umbrella insurer required Delivery Service to carry a $1 million...
-
Ramos Co. provides the following sales forecast and production budget for the next four months: The company plans for finished goods inventory of 120 units at the end of June. In addition, each...
-
A tattoo shop has the following revenue stream over a 5 -year period: $\$ 9,000, \$ 17,000, \$ 19,000, \$ 11,000$, and $\$ 22,000$. What is the EUAW of this business (assume $\mathrm{i}=12 \%$ ).
-
XYZ is a calendar-year corporation that began business on January 1, 2015. For 2015, it reported the following information in its current year audited income statement. Notes with important tax...
-
A start-up firm that is entering an industry usually has to convince potential buyers that its goods are reliable and provide sufficient value in relation to the price that the firm intends to...
-
The following summarized data (amounts in millions) are taken from the September 26, 2020, and September 28, 2019, comparative financial statements of Apple Incorporated, a company that designs,...
-
Write a SQL statement to display the course numbers of classes taught by Hammett Glenn. Write a SQL statement to display the course names of the courses taught by an instructor whose id is 415....
-
A furniture corporation manufactures two models of furniture-Standard and Deluxe. The total estimated manufacturing overhead costs are $64,200. The following estimates are available: Direct materials...
-
Luebke Incorporated has provided the following data for the month of November. The balance in the Finished Goods inventory account at the beginning of the month was $70,000 and at the end of the...
-
Mercer Asbestos Removal Company removes potentially toxic asbestos insulation from buildings. There has been a long-simmering dispute between the company's estimator and the work supervisors. The...
-
Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,000 pounds of oysters in August. The company's flexible budget for August appears below: Quilcene...
-
Med Max buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to dozens of hospitals. In the face of declining profits, Med Max decided to implement an...
-
For a roof of 10,000 sqf there exist 3 alternatives that are shown in the table. Study period=40 yrs and discount rate=3%. Energy (Heating fuel) cost is $3 per gal. Replacement of roof is $4.6 per...
-
Phosgene, COCl2, is a toxic gas used in the manufacture of urethane plastics. The gas dissociates at high temperature. At 400oC, the equilibrium constant Kc is 8.05 104. Find the percentage of...
-
Mel and Cindy Gibson's 12-year-old daughter Rachel was abducted on her way home from school on March 15, 2016.Police reports indicated that a stranger had physically dragged Rachel into a waiting car...
-
Leslie participates in IBO's nonqualified deferred compensation plan. For 2016, she is deferring 10 percent of her $300,000 annual salary. Based on her deemed investment choice, Leslie expects to...
-
Woolard Inc. has taxable income in 2016 of $150,000 before any depreciation deductions (179, bonus, or MACRS) and acquired the following assets during the year: Asset_________________________ Placed...
-
For each of the following sets of numbers, calculate a \(95 \%\) confidence interval for the mean ( \(\sigma\) known); before going through the steps in calculating the confidence interval, the...
-
Consider a 3 -year \(10 \%\) coupon bond. The underlying short rate of interest follows a lattice with initial value of \(R=1.15\) and then has an factor of 1.02 , a down factor of .99 , and...
-
Using the density function of the stopping time probability for a fixed \(\lambda\), find the average time to the first event over the entire interval \([0, \infty)\).
Study smarter with the SolutionInn App