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mezya [45]
3 years ago
10

Nick purchased a $100,000 participating whole-life insurance policy on his life. To date, he has paid $50,000 in total premiumsa

nd received $10,000 in dividends. The policy currently has a net cash value of $15,000 and is subject to a $30,000 outstanding loan. If Nick decides to surrender the policy, he would realize a gain of:
A. $0
B. $5,000
C. $10,000
D. 15,000
Business
1 answer:
gogolik [260]3 years ago
6 0

Answer:

correct option is A. $0

Explanation:

given data

purchased = $100,000

paid =  $50,000

dividend received = $10,000  

net cash value = $15,000

outstanding loan = $30,000

solution

as there will be  no gain on surrender of a whole life insurance policy.

as we get taxable income gain that is

taxable income gain = cash value + outstanding loan + dividends

- premiums   ..................1

taxable income gain = 15,000  + 30,000 + 10,000  - 50000

taxable income gain = -5000

so gain is zero

so correct option is A. $0

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