Harold purchased a $250,000 universal life (UL) policy with a level death benefit plus account value option.
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Question:
Harold purchased a $250,000 universal life (UL) policy with a level death benefit plus account value option. Harold bought the policy 7 years ago and named his adult daughter Corinne as the beneficiary. According to his most recent statement, the account value of his policy is $19,100 with an adjusted cost base (ACB) of $12,400. Harold has a marginal tax rate of 33%. When he asks his insurance agent about the tax consequences of his UL policy, which of the following is the CORRECT response that the agent should provide Harold? | ||
a) | If Harold were to die today, Corinne would receive a $269,100 tax-free benefit. | |
b) | If Harold assigned his policy to Corinne, he would have tax owing of $1,105.50. | |
c) | If Harold took a policy loan of $10,000, he would have tax owing of $3,300. | |
d) | If Harold were to die today, Corrine would receive a benefit of $252,211 after tax. |
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