John purchased a permanent life insurance policy for his grandson, Richard, when Richard was born 28 years ago. This policy has increased in death benefit over time and holds sizeable cash value. Now that Richard is older, John would like to transfer this policy to him as he now is working and has a family.What does John need to know about this transfer in relation to tax implication?
Answer(s): D
Six years ago, Gerard, aged 28, purchased a life insurance policy. Gerard just got married to Tanya, and they both want to purchase more insurance. Reviewing Gerard's policy, Tanya notices that Gerard neglected to mention that he had migraines due to concussions suffered from playing football when he was a teenager. Gerard did not intentionally neglect to mention the migraines as the migraines were never an ongoing issue once he stopped playing football.Which statement is true?
Answer(s): A
Rene and Christine are 42-year-old twins. They are currently in the middle of a career change and have decided to become entrepreneurs by buying a food franchise. They are both in excellent health and only Rene is an average smoker. In setting up the financial structure of their business, they each decided to take out a $400,000 10- year term life insurance policy, designating each other as irrevocable beneficiary. What can we say about the premiums for the life insurance policies that will be issued?
Nelson is turning 46 and wants to explore additional tax planning opportunity. He is an avid investor and has invested into a lot of mutual funds and stocks. His RRSP is currently maxed out. He is meeting with Andrew, his financial advisor with life insurance license, to discuss on his financial future and some life insurance policy options. As a risk taker, Nelson would like tohave a plan that would allow him to supplement his retirement income when he reaches 70. However, his employment income is very high and his marginal tax rate will remain at the top bracket even after his retirement.What recommendation should Andrew make in order to fit Nelson's need?
Answer(s): B
Ben and Pam, both aged 37, are married with three young triplets, Lucas, Jack, and William. Ben works as a pharmaceutical rep, and Pam is a stay-at-home mom. Ben's monthly salary is $6,000. An unforeseen accident happening, where Ben were to die, would leave Pam and the kids in serious financial trouble. Ben and Pam want to address this, so they meet with a licensed life insurance agent to discuss purchasing a life insurance policy. The agent, assuming an interest rate of 4%, shows Ben and Pam the capitalized value of his lost income.Based on the above information, using the income replacement approach, how much life insurance does Ben need?
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