Question

Explain the concept of the buy-term and invest the difference (BTID) strategy regarding life insurance.

Answer #1

The buy-term and invest the difference (BTID) strategy refers to utilizing the capital that would cost to buy a permanent life insurance policy and comparing it to the cost of a term policy which would have the same face amount or death benefit for the term (time period for which the policy was required).

Advocates of buy-term and invest the difference (BTID) compare the return on a permanent life insurance premiums with the same amount invested at the market returns (Stocks, mutual funds, REIT's). Due to this, they ignore the cost of the term insurance. BTID provides a lower fee and better coverage than a whole life insurance product.

What is a return of premium (ROP) term life insurance policy?
Explain how a ROP policy works in relation to a regular term life
insurance.

Term vs. Whole Life Insurance:
Explain the differences between the two insurances?

Fund life & health insurance
Explain carefully why this statement is true
Since life insurance is a long-term product, it is essential for
life insurer to generate quality investment.

Which of the following statements about term life insurance is
correct?
a.
Investors who prefer to receive current income can invest in
income policies, and investors who are willing to accept higher
risks in hopes of obtaining higher returns can invest in growth
funds.
b.
The premiums associated with a term insurance policy are fixed
payments computed as an average of the premiums required over the
expected life of the insured person.
c.
It is a relatively short-term contract that...

Compare the difference between traditional and nontraditional
life insurance products by explaining the financial
disintermediary. Explain thoroughly please.

Property casualty insurance companies invest in shorter term
securities because:
They are not allowed to invest in long-term securities.
To avoid greater decline in securities value if market interest
rates rise.
They need to have sufficient liquidity to cover frequent claims
resulting from property damage.
Short term securities will result in lower tax liability from
sale.

1. In what sense does term life insurance resemble renting a
house, while whole life insurance bears a resemblance to buying the
house?

what is a pro and con of Term and Whole Life Insurance

A retired statistician was interested in determining the average
cost of a $200,000.00 term life insurance policy for a 60-year-old
male non-smoker. He randomly sampled 65 subjects (60-year-old male
non-smokers) and constructed the following 95 percent confidence
interval for the mean cost of the term life insurance: ($850.00,
$1050.00). Explain what the phrase "95 percent confident" means in
this situation.

Suppose a life insurance company sells a $190,000 one-year
term life insurance policy to a 20-year-old female for $330. The
probability that the female survives the year is 0.999502. Compute
and interpret the expected value of this policy to the insurance
company.

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