um payments from his separate checking account. The beneficiary of the policy is their only child. If Tim dies within the next few months, what is the value of the policy that will be included in his gross estate?
um payments from his separate checking account. The beneficiary of the policy is their only child. If Tim dies within the next few months, what is the value of the policy that will be included in his gross estate?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
34.
Two years ago, your client, Tim, purchased a $100,000 whole life insurance policy on the life of his wife. He has made all of the premium payments from his separate checking account. The beneficiary of the policy is their only child.
If Tim dies within the next few months, what is the value of the policy that will be included in his gross estate?
A)
The cash surrender value of the policy because he will have purchased the policy within three years of his death
B)
The full death benefit value of the policy because the proceeds are paid to a family member
C)
The face value of the policy because he paid the premiums from his separate checking account
D)
The replacement value of the policy because he will have an incident of ownership at death
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