Retirement and Other Insurance Concepts
Two clients need the same monthly survivor income. Why does the capital retention approach require a larger death benefit than capital liquidation?
Answer and explanation
Answer: C. Capital retention leaves the principal untouched for heirs, so the fund must be big enough that its earnings alone meet the income need. Capital liquidation draws down principal too, so a smaller fund suffices.Source: NAIC Life Insurance Buyer's Guide — How much life insurance do you need: preserving or spending principal
More retirement and other insurance concepts questions
- If a group life insurance master policy is TERMINATED by the employer, what conversion right do employees covered for at least 5 years possess under TIC § 1131.110?
- If a policy becomes a MEC, how are loans and partial withdrawals taxed under IRC rules?
- If an employee dies during the 31-day group life conversion period BEFORE applying for individual conversion, how is the claim handled under TIC § 1131.109?
- If an employee's group life insurance coverage terminates due to termination of employment, what statutory conversion right is granted under TIC § 1131.108?
- If an employer provides an employee with $150,000 of group term life insurance coverage, how is the coverage above $50,000 taxed to the employee?
- In a business partnership with 3 partners, how many separate life insurance policies are required to fund a cross-purchase buy-sell agreement?
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