Julian age 27 has 2 kids, ages 3 and 4, from his first marriage. He is now marri
ID: 2777962 • Letter: J
Question
Julian age 27 has 2 kids, ages 3 and 4, from his first marriage. He is now married to Margariet. The children live with their mother, Alice. Julian and Margaret each make 26,000$ a year and have recently bought a house for 100,000 with 95,000 mortgage. They have the following life,health, and disability insurance coverages.
Health Insurance: Julian and Margaret are covered under Julians employer plan, which is a preferred phusicians plan with a 500 in network deductible per person per year co-insurance clllause with a family annual out of pocket maximum of 2500 and an out of network 60/40 coinsurance clause with a family out of pocket maximum of 4500.
Long term disability insurance: Julian's covred by an own occupation policy with premiums paid by th employer. The benefit equals 60% of his gross pay after 180 day elimination period. The policy covers both sickness and accidents. The benefit period is 5 year period. Margaret is not covered by disability income insurance.
1) assume julian dies who would recieve the proceeds of the life insurance policies..
2) Does Julian have adequate life insurance?
3) Is Julian's health and disability coverage adequate or not? Why or why not
4) Should Margret have disability income insurance? why or why not?
5) Are ny of the premiums or benefits recieved from life, health, ordisability income insurance taxable to Julian and Margaret.
Policy A Policy B Policy C Insured Julian Julian Margaret Face Amount 250000 78000 20000 TYpe 20 yr level term group term group term Annual Premium 250 156 50 Who pays premium Trustee Employer Employer Beneficiary Trustee Alice Julian Policy Owner Trust Julian MargaretExplanation / Answer
1) On the death of Julian his wife Margret will receive the life insurance.under julian's life insurance plan policy owner is trust,if the policy is owned by the insured itself it is subject to estate tax ,to avoide such tax some may named his spouse or childern as the owner of the policy.an insurable interest exist when aperson has a financial interest in another person life,mostly his/her spouse is assumed to have an insurable interest in insured.his childeren may also get benefit only when they are major,but in this case his boyh childrens are minor so the benefit of life insurance of julian will get to Margret,because the policy in the name of trust ,the insured is the person who only participate in insurance contract .The beneficiary will get benefit on the death of insured.
2) No ,Julian does not have any adeguate life insurance.Julian is not the owner of the life insurance premiem. As per this question he owner of the life insurance is trust. If Julian take a policy on his own life he is the owner and insured of the policy.If his wife buys a policy on his name his wife is the owner of the policy and Julian is only an insured.The policy owner is guaranter and Margret is the person who pay premiem .Insured is the only person who participate in an insurance contract.The beneficiary receive the interest of the policy on the death of the insured.
3) Yes Julian's health and disability insurance is adequate, because both the policy are covered under Julian employment plan .In both cases the premiem was paid by the employer.In the health policy both the owner and insured were Julian and the premiem was paid by the employer.In disability insurance Julian is coverded under his own occupation policy on which premiem was paid by the employer.
4) Yes Margret has disability insurance because she is the insured and the owner of the policy . But the beneficiary was Julian.Julian will receive benefit on the death of margret. But in this case Jilian was died before Margret and then no question arise on the owner ship of Margret sisability insurance.
5) NO,premium paid by the insurer up on the death of insured is not included in gross income of federal and state income ax purpose. how ever if the proceedure are included in the estate of the deseased it will subject to federal and state estate ane inheritance tax.
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