AAMS (CH 8):THE PURPOSE OF LIFE INSURANCE EXAM WITH GUARANTEED ACCURATE ANSWERS, Exams of Nursing

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AAMS (CH 8):THE PURPOSE OF LIFE INSURANCE EXAM AAMS (CH 8):THE PURPOSE OF LIFE INSURANCE EXAM WITH GUARANTEED ACCURATE ANSWERS What are the 4 main reasons to obtain life insurance? - Accurate Answer✅✅- Family Needs

• Protect against loss of income
• Education expenses
• Dependent income
• Aging parents
• Estate Planning
• Final Expenses
• Creating retirement nest egg
• Serving business needs What are some reasons that businesses use life insurance? - Accurate Answer✅✅- Death of a sole proprietor
• Death of a partner
• Death of shareholder/key employee When is life insurance taxable? - Accurate Answer✅✅When the policy has been transferred for value What are the three steps to determine the life insurance needs of a client? - Accurate Answer✅✅- determine immediate cash needs following death of insured
• estimate funds needed to maintain the survivor's lifestyles
• total the immediate cash needs and the estimated amount for the survivor's lifestyle to remain

With many assumptions, what is the general rule of thumb in determining how much life insurance is needed? - Accurate Answer✅✅5 times current salary or some other multiple What is the immediate cash needs formula for insurance? - Accurate Answer✅✅Cash requirements = Debts + Expenses + Cash Bequests - Available liquid assets What are the 2 most overlooked risks that can be managed by insurance? - Accurate Answer✅✅- becoming disabled

• Needing long term care How many of todays 20-year olds will become disabled before they retire? - Accurate Answer✅✅25% How many Americans are without disability insurance other than the basic coverage available through social security? - Accurate Answer✅✅at least 51MM What % of Americans indicate they have enough savings to cover 3 months of living expenses in the event they are not earning money anymore? - Accurate Answer✅✅48% What is mortality versus Morbidity? - Accurate Answer✅✅Mortality - premature death (Life Insurance) Morbidity - reduced health (disability insurance) What are the three levels of long term care? - Accurate Answer✅✅- Skilled Nursing Care
• Intermediate Care
• Custodial Care Who are suitable candidates for term life insurance? - Accurate Answer✅✅- clients working for large organizations
• self employed
• clients who are currently unemployed
• homemakers Who are suitable candidates for cash value life insurance? - Accurate Answer✅✅cash value = permanent life insurance
• prefers regular periodic payments
• tax-sensitive investors
• estate planning concerns
• businesses what are 5 basic principles of income taxation that apply to any life insurance policy? - Accurate Answer✅✅- increases in cash value usually accumulate tax free or tax deferred
• if surrendered, the difference between the principle and surrender value is taxed as ordinary income
• dividends are not taxable because they are a return of premium, interest on dividends is however, taxed as income