Question

Q1: Which of the following represents a disadvantage of a whole life insurance policy?

A. It is difficult to evaluate the true cost of a whole life insurance policy at the time of purchase.

B. A whole life insurance policy provides only temporary coverage for a set period.

C. A whole life insurance policy may require a policyholder to pay higher premiums when the policy is renewed

D. A whole life insurance policy often provides lower yields than other investment vehicles.

Q2. Which of the following are the three stages of the financial planning life cycle?

	A.	Wealth accumulation, wealth preservation, and wealth transfer
	B.	Wealth accumulation, wealth preservation, and wealth depletion
	C.	Wealth accumulation, wealth conservation, and wealth transfer
	D.	Wealth acquisition, wealth transfer, and wealth depletion

3.

1. Janet is considering the purchase of a condo for $150,000 during a recession phase, partly financed by a mortgage. She is due to retire in a few years. If she cannot make her mortgage payments on time, she is bound to incur a:

   	A.	neutral equity on her property.
   	B.	reduced residual value of the property.
   	C.	loan-to-value ratio.
   	D.	foreclosure of her house.
   	E.	fine from the local government.

Answer 1

1.The answer will be A.

The single biggest disadvantage is cost.The cost of whole life insurance can easily exceed a term policy with the same death benefit by thousands of dollars a year.

2.A

The three phases of your financial life are the accumulation phase, preservation phase, and distribution phase. Your entire work life is typically spent in the accumulation phase which directly impacts the beginning of the preservation phase and can significantly impact the outcome of your distribution

phase as you move into retirement.