Life Insurance

Some ides to help keep the homework focused:

Business communication is

• Targeted: Read each question carefully and be sure that what you write answers the question.
• Concise: Note the point value and sentence limit for each question.
• Supported by evidence: Use course theory in conjunction with the article details to answer your questions.
• Error free: Check your grammar, spelling and punctuation for accuracy.

1. Conversion option in a term life insurance contract. (Chapter 17)

a. Explain what is the conversion option in a term life insurance.
b. Compare two commonly used conversion methods, i.e. attained-age method and original-age method.
c. Explain why insurers often offer conversion option only for a limited period.

2. Explain how the "buy term and invest the difference" philosophy ignores several key features of life insurance protection that are not available for other investment products. (Chapter 17)

3. Refer to the article What's the Best Life-Insurance Policy.

a. What are the pros and cons of Term Life and Permanent Life?
b. What is the author's suggestion if one is undecided between buying term life and permanent life?
c. Refer to your answers to Question 1, part c, what the author may have missed for the convertible term life?

4. Refer to the article Life Policies: The Whole Truth.

a. Why many people are not good candidate for the whole life insurance?
b. What are the factors that can affect the cash value?
c. What shall you pay attention to the policy illustration as discussed in the article?

5. Richard, age 35, is married and has two children, ages 2 and 5. He is considering the following financial goals and objectives:

- Pay off the mortgage on his home, which has 25 years remaining
- Accumulation of a sizable retirement fund
- Payment of monthly income to the family if he should die
- Withdrawal of funds from the policy when the children reach college age
- If possible, have some active control on his investment in order to archive better-than-expected return on investment

For each of the following life insurance policies, indicate which of the above financial goals, if any, could be met if the policy is purchased. Treat each policy separately. [1 point for each financial objective, 2 sentences for each financial goal]

a. Decreasing Term Insurance
b. Ordinary Life Insurance
c. Universal Life Insurance
d. Variable Universal Life Insurance.