Why is it important to insure an estate?
A To pay outstanding financial obligations of the deceased
B To ensure that funeral expenses, probate costs, taxes, and other debts are paid
C To ensure that a fair distribution of estate proceeds can be made in an unobstructed fashion D All of the above

Why is life insurance so important to Canadian families?
A The cash values of most insurance policies are secure from the demands of creditors.
B Sufficient policy face values can provide capital and income relief on the death of family breadwinners.
C Not only can the lives of principal income-earners be insured, but all forms of debt can be insured.
D All of the above

Life insurance has other principal functions besides making a cash payment on the death of a life insured. What are they?
A Insurance can provide an emergency cash reserve.
B It can provide capital to pay ―last expenses‖ and operating capital during a family’s readjustment period.
C Life insurance proceeds generate a financial lump sum that can be used to cover a family’s current and long-term operating expenses.
D All of the above

How do you calculate “inflation-adjusted capitalized value”?
A It is not possible to do so.
B Use the capitalized value and multiply the answer by the prevailing inflation rate.
C Use the capitalized value and multiply the answer by the prevailing interest rate.
D Take the prevailing interest or investment rate, deduct the nominal inflation rate, and complete the formula calculations.

An insured makes $42,000 a year, and the current interest rate is 3.4%. She has a generous A&S policy, plus disability benefits that pay 70% of her salary. How much life insurance does she need based on capitalization of income?
A $1,428
B $12,352
C $142,800
D $1,235,294

In your opinion, is the “capital-needs approach” the best insurance calculation option?