1. Assume you owned a refrigerator that was 7 years old that was recently destroyed in a fire (a covered peril under your homeowners. policy), with an original purchase price of $300. The refrigerator had a 10 year lifespan. A new refrigerator of similar type would cos $550 today. If your homeowner's policy is written with replacement cost coverage with enect to nersonal property, how much can you expect to collect from the insurance company? $90 $165 $385 $550 2. In reviewing your life insurance policies, you've discovered one in which you are the insured, your spouse is the owner and the death benefits are to be paid to your children in the event of your death. If you were to die today, what would be the effect of such an arrangement? Proceeds would be paid to your children free of income taxes Proceeds would be paid to your children subject to gift taxes Proceeds would be paid to your children and taxed as ordinary income A & B are both correct 3. Assume that you contribute $1000 to a flexible spending account maintained by your employer at the beginning of the year. During the year you incur $900 in medical expenses that are not otherwise covered by your health plan at work. If you are in the 35% marginal tax bracket, what is the net financial effect of your participation in the FSA? $650 net savings $350 net savings $50 net loss $250 net savings