What is the formula to calculate the capital required to replace income?
annual income ÷ rate of return
How do you calculate after-tax return?
investment return × (1 – tax rate)
What is the formula for inflation-adjusted return?
(1 + investment return) ÷ (1 + inflation rate) – 1
How do you calculate after-tax, after-inflation return?
(1 + after-tax return) ÷ (1 + inflation rate) – 1
What is the formula for capital for income shortfall using the retention method?
annual shortfall ÷ rate of return
How is capital for income shortfall calculated using the drawdown method?
annual shortfall × number of years
What components are included in total capital needs?
- capitalized shortfall
- debts
- taxes
- estate/final expenses
- education/legacies/charity
How is new insurance required calculated?
total capital needs – available assets – existing insurance
What is the formula for capital gain?
fair market value – adjusted cost base
How is capital gains tax calculated in Canada for 2024?
first 250,000 × 50% × tax rate + excess × 66.7% × tax rate
What is the formula for after-tax asset value?
fair market value – capital gains tax
How is the annual premium calculated?
(face amount ÷ 100,000) × monthly rate × 12
What does cumulative cost represent?
sum of annual premiums over years (adjust for renewals or coverage changes)
What is the formula for misstatement adjustment?
(premium paid ÷ correct premium) × face amount
How is the policy loan balance at death calculated?
original loan × (1 + interest rate) ^ years
What is the formula for net death benefit with a loan?
death benefit – outstanding loan
How is net death benefit with unpaid premium calculated?
death benefit – unpaid premium
What is the collateral assignment payout?
lender gets outstanding loan amount, beneficiary gets the rest
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Introduction to Life Insurance17
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Term Life Insurance44
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Whole Life & T-10039
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Universal Life38
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Riders and Supplementary Benefits35
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Group Life Insurance47
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Taxation of Life Insurance & Tax Strategies40
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Business Life Insurance32
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Application & Underwriting41
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Assessing Needs & Situation29
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Recommending a policy33
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Ongoing Service26
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Formulas18
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Practice Questions22
