Nelson is turning 46 and wants to explore additional tax planning opportunity. He is an avid investor and has invested into a lot of mutual funds and stocks. His RRSP is currently maxed out. He is meeting with Andrew, his financial advisor with life insurance license, to discuss on his financial future and some life insurance policy options. As a risk taker, Nelson would like tohave a plan that would allow him to supplement his retirement income when he reaches 70. However, his employment income is very high and his marginal tax rate will remain at the top bracket even after his retirement.
What recommendation should Andrew make in order to fit Nelson's need?
Ben and Pam, both aged 37, are married with three young triplets, Lucas, Jack, and William. Ben works as a pharmaceutical rep, and Pam is a stay-at-home mom. Ben’s monthly salary is $6,000. An unforeseen accident happening, where Ben were to die, would leave Pam and the kids in serious financial trouble. Ben and Pam want to address this, so they meet with a licensed life insurance agent to discuss purchasing a life insurance policy. The agent, assuming an interest rate of 4%, shows Ben and Pam the capitalized value of his lost income.
Based on the above information, using the income replacement approach, how much life insurance does Ben need?
Gary owns a $500,000 T-20 life insurance policy with an accidental death rider of $250,000. His estate is named as beneficiary. Gary dies when his car falls into a lake. The autopsy shows that he had a heart attack, which caused his death and led to the accident.
What death benefit amount will the life insurance company pay Gary's estate?
Konrad is the owner of CrossBoy, a manufacturing company employing over 50 employees. Konrad recently took out a $500,000 loan to expand his business. Terrence works as a sales manager and is responsible for roughly 40% of the company’s revenue. Konrad recognizes the importance of Terrence's contributions to the success of the company. Therefore, in addition to a sizeable basesalary, CrossBoy also pays Terrence regular performance-based bonuses. Konrad understands that if Terrence dies prematurely, CrossBoy would suffer financially. What should he do to protect his company?
Rene and Christine are 42-year-old twins. They are currently in the middle of a career change and have decided to become entrepreneurs by buying a food franchise.
They are both in excellent health and only Rene is an average smoker.
In setting up the financial structure of their business, they each decided to take out a $400,000 10-year term life insurance policy, designating each other as irrevocable beneficiary.
What can we say about the premiums for the life insurance policies that will be issued?
Larissa is a 65-year-old retired marketing executive. She is single and has no dependents. Larissa accepted a generous retirement package from her employer five years ago and used her early retirement cash bonus to consolidate her financial affairs. She paid off mortgages on both her principal residence (a condo) and her vacation cottage. The fair market value (FMV) of the real estate increased significantly over the years. She named her sister Natalya as the sole beneficiary of her estate. In addition to the two properties, Larissa's estate includes a registered retirementsavings plan (RRSP) and shares of Apple Inc. that she purchased in her tax-free savings account (TFSA) 10 years ago. If Larissa were to pass away today, which of her assets would be fully taxable on her final income tax return?
Harris is the father of Aden, Charlie, and Edmond. They are turning 29, 26, and 24 this year respectively. Harris purchased a life insurance policy with Aden as the life insured, Charlie as the successor owner, and Edmond as co-owner of the policy. He also named his wife, Becky, as the irrevocable beneficiary. Years have passed and the life insurance accumulated sufficient cash value. Harris is working out of town most of the time and none of the family members can get hold of him. One day, Harris encounters a car accident in another country and becomesunconscious. Becky and the children decide to cancel the policy and remit the cash value to Harris’s hospital. Which party can execute the intended transaction?
Callum is an agent with Neverland Insurance. It was recently discovered that he had been using a tied selling technique to double his sales with each client. Which one of the following organizations will take action against Callum’s conduct?
Andre, an insurance agent, meets with his client Jasper to discuss his $150,000 whole life insurance policy. Jasper is deeply indebted and needs at least $40,000 to cover his debt. Andre tells him about a company he knows that will be willing to give him $75,000 if he assigns his policy to them. Did Andre act appropriately?
After working nine years as an insurance agent, Jamie decides to make a change in her life and go back to school. A colleague she used to work with on personal health insurance congratulatesher and tells her that he will pay her a flat fee for every health insurance referral she makes to him, as long as the referral results in a sale. What could be said about this referral arrangement?
