Question

In: Accounting

Joan paid $10,000 in premiums for her whole life insurance policy that now has an $11,000...

Joan paid $10,000 in premiums for her whole life insurance policy that now has an $11,000 cash value. How much must she include in her income, if any, if she takes a $10,000 cash value loan from the policy?

Solutions

Expert Solution

She should not inclue any amount in her income.

Withdrawals of any amount from the accumulated cash value of your whole or universal life policy is tax free up to the amount of the premiums you have paid.

since she has loan which is equal to the premium paid, no tax impications arise.

A life insurance policy loan is just a loan from the insurer in which the cash value of your policy is used as collateral

The cash value of $11000 shall be treated as collateral security.

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Over the years, Luke paid $65,000 in premiums on a whole life policy with a surrender...
Over the years, Luke paid $65,000 in premiums on a whole life policy with a surrender value of $200,000 and $500,000 death benefit. How much is taxable if upon reaching 65, Show and Label ALL work a) Luke passes away and $200,000 is paid to his sister b) Luke cashes the policy in while in good health c) Luke cashes in the policy after being diagnosed with a terminal illness with a life expectancy of 20 months
For the same amount of premiums in comparison to whole life insurance, term life insurance generally...
For the same amount of premiums in comparison to whole life insurance, term life insurance generally purchases a.a greater amount of coverage. b.less amount of coverage. c.the same amount of coverage. d.a higher deductible. e.a lower deductible. Annual Cost-of-Living-Adjustment (COLA) changes of coverage levels within long-term care insurance, disability insurance, or homeowner's insurance policies is generally deigned to protect policyholders against a.the adverse event occurring. b.lower rates of return. c.lack of insurability. d.the company defaulting on its payments. e.inflation. Over...
1. For the same amount of premiums in comparison to whole life insurance, term life insurance...
1. For the same amount of premiums in comparison to whole life insurance, term life insurance generally purchases a.a greater amount of coverage. b.less amount of coverage. c.the same amount of coverage. d.a higher deductible. e.a lower deductible. 2. Annual Cost-of-Living-Adjustment (COLA) changes of coverage levels within long-term care insurance, disability insurance, or homeowner's insurance policies is generally designed to protect policyholders against a.the adverse event occurring. b.lower rates of return. c.lack of insurability. d.the company defaulting on its payments....
A random sample of 45 life insurance policy holders showed that the average premiums paid on...
A random sample of 45 life insurance policy holders showed that the average premiums paid on their life insurance policies was $345 per year with a sample standard deviation of $65. Construct a 90% confidence interval for the population mean. Make a statement about this in context of the problem.
Question 6 In 2017, Lori assigned a paid-up whole life insurance policy to an Irrevocable Life...
Question 6 In 2017, Lori assigned a paid-up whole life insurance policy to an Irrevocable Life Insurance Trust (ILIT) for the benefit of her three children. The ILIT contained a Crummey provision for the benefit of each child. At the time of the transfer, the whole life insurance policy was valued at $200,000, and since Lori had not made any other taxable gifts during her lifetime, she did not owe any gift tax. Lori died in 2018, and the face...
Edie died last month owning a whole life insurance policy on her husband Rob’s life. The...
Edie died last month owning a whole life insurance policy on her husband Rob’s life. The death benefit amount was $500,000 and the insurance company valued the policy at $80,000. Edie was the beneficiary of the policy and her son Manny was the contingent owner. What amount is included in Edie’s estate? Is the policy part of Edie’s probate estate? Explain your answers.
Tonya purchased a life insurance policy on her own life. Her husband Donald is the beneficiary of the policy.
Question 13  Tonya purchased a life insurance policy on her own life. Her husband Donald is the beneficiary of the policy. Which of the following is not a necessary legal element of the contract?1)Offer and acceptance.2)Legal competency of all parties.3)Listed beneficiary.4)Consideration.Question 14 Which of the following statements is/are correct?1. Insurance companies are concerned with morale hazard as people who have insurance are not as concerned about protecting their own property.2. Intentional acts of an insured resulting in a loss are generally insurable.1)1...
Research the differences in the premium costs for a $100,000 whole life insurance policy and a...
Research the differences in the premium costs for a $100,000 whole life insurance policy and a $100,000 term life insurance policy. Which is more expensive? Why is there a price difference between the two? Which would you prefer and why?
3. Suppose a whole-life policy from the insurance company has a 55% chance of lapsing in...
3. Suppose a whole-life policy from the insurance company has a 55% chance of lapsing in its first year. a. Describe the sample space for the variable L if L denotes the single event of the policy lapsing b. What type of distribution would this be? c. Assign probabilities to each value of L d. Calculate the expected value and the variance of L d. Calculate the expected value and the variance of L
3. Suppose a whole-life policy from the insurance company has a 55% chance of lapsing in...
3. Suppose a whole-life policy from the insurance company has a 55% chance of lapsing in its first year. Describe the sample space for the variable L if L denotes the single event of the policy lapsing (0.5 point) What type of distribution would this be? (0.5 point)____________________________________ Assign probabilities to each value of L (0.5 point) Calculate the expected value and the variance of L (0.5 point) For Reference: An insurance company is concerned about the persistency (length of...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT