Life insurance policy with a short premium paying period

Assignment Help Financial Management

Reference no: EM131020253

A limited-pay whole life insurance policy with a short premium paying period (e.g., 10 years) runs the risk of becoming a “MEC” (Modified Endowment Contract) if:

a. the insured pays the full annual premium and dividends are applied as additional premiums

b. the policy passes the seven-pay test

c. the policy passes the incidental benefit test

d. Table 38 rates, rather than PS 58 rates, are used to measure the employee's economic benefit

Reference no: EM131020253

Questions Cloud

Calculate the hpr and profit amount on equity position : On March 20, 2012 you bought 1,000 shares of Starwood Hotels & Resorts Worldwide Inc. (HOT) at $14.00 on 50% margin. The margin loan carries a 8% annual interest rate, paid every 3 months from the day of the purchase. Calculate the HPR (%) and profit..

The out-of-pocket expenses incurred by security brokers : The out-of-pocket expenses incurred by Security Brokers in the design and distribution of the issue were $300,000. What profit or loss would Security Brokers incur if the issue were sold to the public at the following averge price?

Additional net working capital investments : Aria Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implant as follows: Year Unit Sales 1 79,000 2 92,000 3 106,000 4 101,000 5 82,000 Production of the implants will require $1,580,000 in net working capital to sta..

Limited-pay whole life insurance policy : If a limited-pay whole life insurance policy is determined to be a “MEC” (Modified Endowment Contract): Select one: a. cash value increases cease immediately b. distributions, including policy loans, will likely be includable in income c. death benef..

Life insurance policy with a short premium paying period : A limited-pay whole life insurance policy with a short premium paying period (e.g., 10 years) runs the risk of becoming a “MEC” (Modified Endowment Contract) if:

What is the capital gain or loss on your bond : You own a bond with the following features: 6 years to maturity, face value of $1000, coupon rate of 4% (annual coupons) and yield to maturity of 1.8%. Just after you purchase the bond, the yield to maturity rises to 5.2%. What is the capital gain or..

How many more dollars of contribution margin : Digby Corp. ended the year carrying $20,263,000 worth of inventory. Had they sold their entire inventory at their current prices, how many more dollars of contribution margin would it have brought to Digby Corp.?

In a qualified long-term care contract : In a qualified long-term care contract:

Understand how marginal tax brackets work : Understand how marginal tax brackets work and how they are applied to determine a tax liability. Calculate and compare a company’s effective tax rate with its marginal tax rate

User Account

All Pages