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1. Billy Bob is the policyowner of an Option II (non-level death benefit) universal life policy with a face amount of $60,000. His wife, Betty
1. Billy Bob is the policyowner of an Option II (non-level death benefit) universal life policy with a face amount of $60,000. His wife, Betty Bob, is the insured. As of the date of Betty's death, the policy had an account value of $6,000; cumulative premiums paid of $5,000; and an outstanding policy loan balance of $3,000.
a. Determine the death benefit proceeds payable to the beneficiary.
b. How much of the death benefit proceeds would be considered taxable income to the beneficiary?
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