Billy Bob is the policyowner of an Option II (non-level death benefit) universal life policy with a face amount of $60,000. His wife, Betty Bob, is the insured. As of the date of Betty's death, the policy had an account value of $6,000; cumulative premiums paid of $5,000; and an outstanding policy loan balance of $3,000.

a.     Determine the death benefit proceeds payable to the beneficiary.

b.     How much of the death benefit proceeds would be considered taxable income to the beneficiary?

Answer rating: 100% (QA)

Billy Bob has chosen option II nonlevel death benefit UL policy ie Universal Life Policy UL with Inc... View the full answer