Chapter 15

A Survivor policy is most often used:

For Estate Planning Purchases This is used to pay a estate taxes, I didn't mention in the video that this will be a whole life policy (not term) and the surviving spouse (Nancy) continues to pay the premium until her death. With a joint life policy, there are no other premiums to be paid when Jack dies. Both survivorship life and joint life will use whole life policies, not term policies.

Family Maintenance Policy:

Is a combination of Whole Life and Term. Although we know that the term policy is really a level term policy, it is perfectly correct to say that a family maintenance policy is a combination of whole life and term. This typical of what test writers love to do, they know that you are inclined not to mark this answer, because it isn't perfect, even though it is "best" among the four choices. I remember that the family maintenance policy "maintains" the familiy's lifestyle. So, it provides whole life for its primary coverage, but uses level term to "maintain" the family's income level regardless of how many kids are still living at home when the breadwinner dies. Remember that is the family income policy that includes whole life and decreasing term - it will pay a smaller amount each year, if the main breadwinner dies while the kids are still living at home.

A "Last to Die" policy is known as a:

Survivorship Life Policy

Paula and Sam are an older married couple. If either dies, the other spouse will inherit the other's substantial assets without any death tax. However, when the second spouse dies, the estate may face a huge death tax. What type of insurance should Paula and Sam purchase to pay the death tax due when the second spouse dies?

Survivorship life policy A survivorship life policy pays only when the second spouse dies. (remember, survivorship and second both begin with the letter "s") survivorship life is used to pay the estate tax, which is only applied upon the death of the second spouse.

Which of the following would permit an Insured's wife to purchase life insurance?

Spouse's Rider

Jeremy is interested in purchasing a policy that will pay A lump sum upon his death, and provide stable monthly income for ten years. What should Jeremy purchase?

10-year family maintenance policy The 10 year family maintenance policy will "maintain" the family standard of living by paying a level amount until the last of the kids is out of the nest. Thus, it uses a level term rider.

Joyce and Scott are a married couple and have three children, ages 5, 7, and 9. Scott wants a whole life policy on himself, no insurance on Joyce, and extra coverage to pay the money needed for Joyce to finish raising the children to age 23 if Scott dies young. Joyce wants to be able to count on having the same amount of money no matter how many of the children are still living at home if Scott dies young. What do you recommend?

A Family Maintenance Policy A family maintenance policy will pay the same level, death benefit on Scott and provide for extra money for Joyce to "maintain" a level lifestyle, no matter how many children are still in the nest when Scott dies. Nice choice! However, with the family income policy, the amount Joyce will receive will be reduced each year.

Sandra and Charles want to purchase a policy that will automatically cover newborns at no extra cost. Which policy should they choose?

A Family Policy New Point: the only policy in the list which provides any coverage for family members is the family policy. It covers the main breadwinner with the whole life policy, but offer a smaller convertible term policies for the spouse and children. There's no extra cost for policies of newborns come along. The underwriters already have that possibility factored into the premium.

A "Family Policy" provides:

Different coverage for all family members.

Which policy would you recommend to a husband and wife who want to buy just one Life Insurance covering both, and want the policy to pay when the first spouse dies?

Joint Life If we were only one policy, the only choice in the list is the joint life policy. It covers both spouses with only one policy. It pays when the first spouse dies (unlike a survivorship life policy, which pays upon the death of the second spouse)

A "First to Die" policy is known as a:

Joint Life Policy A "first to die" policy is used to cover both spouses with one policy. it will pay when the first spouse dies. This is to be contrasted with the survivorship life policy, which also covers both spouses, but only pays when the second spouse dies (primary used to pay a state taxes that only apply when the second spouse dies) And, new points: the surviving spouse (Nancy) no longer has to continue paying the premiums after Jack dies. Also, will want this to be a whole life policy, rather than a term policy that could expire before Jack's death. Another new point: an insurer will charge more for a joint life policy than a survivorship life policy, because (all things being equal) the couple will make more payments with a survivorship life policy. The surviving spouse will continue to make payments under a survivorship life policy.

A Family Maintenance policy combines a Whole Life policy with:

Level term My memory "device" is that maintenance keeps us even, that is, level.

Bill and his wife June are very successful doctors. They are worried about estate taxes. They should:

Purchase a Survivorship Life policy for the amount of estate taxes they expect will be due when they die. They want a whole life policy that will pay when the second dies. That is when the death tax will kick in. New point: because the surviving spouse continues to pay the premium after death of the first spouse, these policies are cheaper (all things considered) than a joint life policy

Which is correct regarding a Family Policy?

The policy consists of a Permanent policy on the breadwinner and Term policies for the other family members. The policy consist of a permanent policy on the breadwinner and term policies for the other family members is correct. If new kids come along, they are covered at no extra premium.

Which statement regarding children's policies under a family policy is true?

They are convertible Term policies.

Which type of insurance is most likely used for either a Joint Life policy or a Survivorship policy?

Whole Life Both the joint life and the survivorship life policies are always whole life. There is no way Nancy would let me buy a joint life policy as term insurance because I could die after the term policy expires. This is one situation where term insurance would not be appropriate.

A Family Maintenance Policy is a combination of which of the following?

Whole life and level term Maintenance keeps us "level" thus level term

Which choice may provide coverage for all the family members and a single policy?

family policy The family policy provides a whole life policy on the breadwinner and smaller convertible term policies on the spouse and children - everyone is covered in "one" policy" New Point: and any newborns are covered without any additional premium charge.