Jeff and Mary are married couple and with no kids. They are both working. Currently, they have the following assets and liabilities: home, $5,000,000; car, $100,000; saving account balance,

$50,000; mortgage balance, $2,000,000; car loan balance, $50,000; and credit card balance,

$3,800.

Robert, Jeffs father, had kept a term life insurance policy for 10 years. When it came time to renew his policy, he found a universal life insurance plan offered by the same insurance company better suited his needs and requirement. After doing some investigation, he decided to switch the term life insurance policy to the universal life insurance policy provided by the same insurance company. He paid the premiums and kept the policy in force. One year after the switch, he committed suicide. Jeff got all of his father's affairs in order and discovered the universal life insurance policy. Jeff, as the beneficiary, approached the insurance company for the insurance claim for the death benefit.

Required:

1. Based on the current financial situation of Jeff, using the DINK method to estimate his life insurance need. It is assumed that the funeral expense for Jeff is $50,000 and Mary will continue to work after the death of Jeff. Show all yourworkings. (5 marks)

2. Distinguish the differences between term life policy and universal life policy from the perspectives of premium paid, protection period and policy benefits. (3 marks)

3. Can the insurance company reject Jeffs life insurance claim? Briefly explain your answer with reference to the provision stated in a typical life insurance policy. (4 marks)

Ryan purchased a Voluntary Health Insurance Scheme (VHIS) plan for himself on 30 June 2020 for one of the purposes to enjoy the benefit of tax deduction. Premiums payable for his VHIS policy was $7,000. He paid the premium annually and was given a 5% premium discount on his own VHIS policy. In addition, Ryan also purchased four VHIS policies for the benefits of his parents and cousin respectively.

Below are the premiums paid by Ryan for them between June and November 2020.

Policy holder	Policy	Insured person	Annual premiums paid ($)
Ryan	No. 1	Father	5,000
Ryan	No. 2	Father	3,000
Ryan	No. 3	Mother	9,000
Ryan	No.4	Cousin	5,000

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Ryan's VHIS policy specified a $3,000 deductible, a 30% coinsurance for all care after meeting the deductible, and a $6,000 out-of-pocket limit. The day after Ryan signed up for his plan, he got into a car accident. He was hospitalized for 7 days for an intermediate size operation and incurred the following covered medical expenses:

• Hospitalization: 7 days at a room a board charges of $1,400 a day
• Surgical expenses: $220,800
• Other medical expenses: $10,500

Required:

1. Calculate the amount of medical expenses paid by Ryan for the intermediate size operation. Show all yourworkings. (4 marks)

2. Assuming the tax rate is 15%, calculate Ryan' s total allowable tax deduction amount and total amount of tax saved for the annual premiums paid in 2020. Copy the following table format in your answer sheet. Show allyour workings. (4 marks)

	Premiums paid ($)	Allowable tax deduction amount ($)	Amount of tax saved ($)
Ryan (taxpayer)
Father
Mother
Cousin
	Total