Richard, age 35, owns an ordinary life insurance policy in the amount of $250,000. The policy is
Question:
a. Richard finds the premium payments are financially burdensome. He wants to reduce his annual premium outlay.
b. Richard has leukemia and is uninsurable. He needs additional life insurance protection.
Richard, age 35, owns an ordinary life insurance policy in the amount of $250,000. The policy is a participating policy that pays dividends. Richard has a number of financial goals and objectives. For each of the following situations, identify a dividend option that could be used to meet Richard's goals. Treat each situation separately.
a. Richard finds the premium payments are financially burdensome. He wants to reduce his annual premium outlay.
b. Richard has leukemia and is uninsurable. He needs additional life insurance protection.
c. Richard wants to accumulate additional cash for a comfortable retirement.
d. Richard would like to have a paid-up policy at the time of retirement.
e. Richard has substantial earned income that places him in a high marginal income-tax bracket. He wants the insurer to retain the dividends, but he does not want to pay income tax on the investment earnings.
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Principles of Risk Management and Insurance
ISBN: 978-0132992916
12th edition
Authors: George E. Rejda, Michael McNamara
Question Posted: