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Pfin (book Only)
6th Edition
ISBN: 9781337117029
Author: Billingsley, Randy; Joehnk, Michael D.; Gitman, Lawrence J.
Publisher: Cengage Learning
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Question
Chapter 10, Problem 7FPE
Summary Introduction
To discuss: The appropriate type of supplemental insurance for the H’s family in the light of their expressed concerned.
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Which of the following situations describes a risk exposure that can be most appropriately insured against with an individual disability income policy?
A)A self-employed bookkeeper earns $40,000 a year out of a small office located in her neighborhood, and wants to protect her income.
B)A lawyer wants to make sure his business overhead expenses are covered if he becomes disabled.
C)A couple with a military retirement income manages a self-storage business, and they are compensated with a place to live that is on the premises of the business.
D)An accountant's spouse owns the building in which the accounting office is located. All of the practice’s income is used to pay rent and other business expenses, so the accountant has no compensation from the business.
Which statement describes a technique used to address the issue of ensuring the payment of adequate child support by a noncustodial parent when the parents of minor children are divorced?
A)
A provision in the noncustodial parent's will leaving property to the minor will solve this concern.
B)
To ensure that child support payments are continued if the noncustodial parent dies or becomes disabled before such payments are to cease, the parents must enter into a nuptial agreement.
C)
An irrevocable trust established and funded by the noncustodial parent to ensure payment of child support can be a valuable tool to protect such assets from the claims of future creditors of the noncustodial parent.
D)
Insurance on the life of the noncustodial parent must be owned by an irrevocable life insurance trust to prevent the noncustodial parent from changing the beneficiary.
Vern has a whole life policy, and he has named his wife Corinne as a revocable
beneficiary. He is considering changing her status to an irrevocable beneficiary, but is
unsure of the potential consequences. If Vern makes Corinne irrevocable beneficiary,
what actions can he still take without Corinne's permission?
i) Receive policy dividends.
ii) Obtain a policy loan.
iii) Assign the policy.
iv) Let the policy lapse.
a) i) and ii)
Ob) i) an iv)
c) ii) and iii)
d) iii) and iv)
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