Nicole Richman 35, is a smoker with excellent health. She owns $200,000 of whole life insurance policy at a cost of $8 per $1000 of coverage per year. If she cancels the policy she will get the cash surrender value of $15,000. The policy has an adjusted cost base of $12,000. She would like to get more coverage without increasing her premium by switching to a 10-year term policy. Using the attached table 10.2, determine how much insurance can she buy for the same premium? Using the cash surrender value, how much more term insurance she can purchase if her marginal tax rate is 46% and the before tax rate of return is 4%? What other factors should she consider before she makes the switch?

Answer rating: 100% (QA)

The 10year term policy would have a total premium of 9 per 1000 of coverag... View the full answer