Case Study 1 The Assessment Year would be 2021/22. Notes on computation of Salaries Tax / Personal Assessment are attached. Mr. Lo is 56, a member of management broad in a private university at a monthly salary of $120,000. His wife, Mrs. Lo aged 48, is a merchandising officer of a trading company with a monthly salary of $30,000 and she only makes mandatory contributions to her MPF schemes. However, Mr. Lo makes voluntary contributions of $10,000 per month to the Qualifying Tax Deductible MPF schemes in addition to the mandatory contributions. They have one daughter, 13 years old, studying in a local secondary school. They recently live in a self-occupied apartment valued at $8,000,000. They still have the mortgage payment with the amount of $1,200,000. The current monthly mortgage payment is $18,500 paid by Mr. Lo. The mortgage interest rate is P - 2.5% and the prime rate is fixed at 5%. Apart from the mortgage payment, the monthly expense for the family is $58,000 which includes the monthly allowance to their parents. Mr. Lo's employer provides excellent fringe benefits, including group life insurance equal to 2 times Mr. Lo's annual salary, group disability insurance and adequate family medical insurance. The beneficiary of Mr. Lo's group life insurance is Mrs. Lo. Mr. and Mrs. Lo do not have any personal life insurance policy. Currently they have no will. Mr. Lo expects to be retired at 60 due to university regulations. He holds i-bonds and blue-chips stocks which valued around $500,000. Mr. and Mrs. Lo currently have saving of $1,000,000 in their bank account. Question 1 (25 marks) (1) Would you suggest Mr. and Mrs. Lo to purchase their own life insurance policies? (4 marks) (ii) Discuss the advantages and disadvantages of term life insurance. (8 marks) (iii) If Mr. Lo died today, how much would Mrs. Lo get from Mr. Lo's group life insurance? Would that be enough for her? Why? (7 marks) (iv) What would you advise Mr. and Mrs. Lo on investment aspects? (6 marks) Case Study 1 The Assessment Year would be 2021/22. Notes on computation of Salaries Tax / Personal Assessment are attached. Mr. Lo is 56, a member of management broad in a private university at a monthly salary of $120,000. His wife, Mrs. Lo aged 48, is a merchandising officer of a trading company with a monthly salary of $30,000 and she only makes mandatory contributions to her MPF schemes. However, Mr. Lo makes voluntary contributions of $10,000 per month to the Qualifying Tax Deductible MPF schemes in addition to the mandatory contributions. They have one daughter, 13 years old, studying in a local secondary school. They recently live in a self-occupied apartment valued at $8,000,000. They still have the mortgage payment with the amount of $1,200,000. The current monthly mortgage payment is $18,500 paid by Mr. Lo. The mortgage interest rate is P - 2.5% and the prime rate is fixed at 5%. Apart from the mortgage payment, the monthly expense for the family is $58,000 which includes the monthly allowance to their parents. Mr. Lo's employer provides excellent fringe benefits, including group life insurance equal to 2 times Mr. Lo's annual salary, group disability insurance and adequate family medical insurance. The beneficiary of Mr. Lo's group life insurance is Mrs. Lo. Mr. and Mrs. Lo do not have any personal life insurance policy. Currently they have no will. Mr. Lo expects to be retired at 60 due to university regulations. He holds i-bonds and blue-chips stocks which valued around $500,000. Mr. and Mrs. Lo currently have saving of $1,000,000 in their bank account. Question 1 (25 marks) (1) Would you suggest Mr. and Mrs. Lo to purchase their own life insurance policies? (4 marks) (ii) Discuss the advantages and disadvantages of term life insurance. (8 marks) (iii) If Mr. Lo died today, how much would Mrs. Lo get from Mr. Lo's group life insurance? Would that be enough for her? Why? (7 marks) (iv) What would you advise Mr. and Mrs. Lo on investment aspects? (6 marks)
