Energo Electronics, an incorporated business, has a highly paid electrical and computer specialist, Seng, on the payroll whose services are essential to the success of the business. The company is concerned that should Seng die or become disabled the business would suffer serious financial setbacks. In order to partially protect its interests, the company plans to purchase $500,000 worth of term insurance on Seng's life. Earning over $300,000 a year Seng's primary concern is to shelter as much of his income as possible from taxes. He has little personal need for life insurance. Suggest a solution using universal life insurance that would meet both Seng's and the company's needs. A) The company could buy a $500,000 UL policy on Seng's life with the level plus account value death benefit. The company would own the basic death benefit and Seng would own the cash value and the portion of the death benefit equal to the account value. The company would pay a premium equal to the policy NCPI and Seng would pay the balance of any planned premium. B) Each of Seng and the company could buy a $500,000 level death benefit UL policy on Seng's life, with each being the beneficiary of the policy it/he owns. Seng could maximum-fund his policy and the company could minimum-fund its policy. C) Each of Seng and the company could buy a $500,000 UL policy on Seng's life with the level plus account value death benefit. Each would be the beneficiary of the policy owned by the other. Seng could maximum-fund his policy and the company could minimum-fund its policy. D) Seng could buy a $500,000 UL policy on his own life with the level plus account value death benefit. Seng would own the basic death benefit and the company would own the cash value and the portion of the death benefit equal to the account value. Seng would pay a premium equal to the policy
Energo Electronics, an incorporated business, has a highly paid electrical and computer specialist, Seng, on the payroll whose services are essential to the success of the business. The company is concerned that should Seng die or become disabled the business would suffer serious financial setbacks. In order to partially protect its interests, the company plans to purchase $500,000 worth of term insurance on Seng's life. Earning over $300,000 a year Seng's primary concern is to shelter as much of his income as possible from taxes. He has little personal need for life insurance. Suggest a solution using universal life insurance that would meet both Seng's and the company's needs. A) The company could buy a $500,000 UL policy on Seng's life with the level plus account value death benefit. The company would own the basic death benefit and Seng would own the cash value and the portion of the death benefit equal to the account value. The company would pay a premium equal to the policy NCPI and Seng would pay the balance of any planned premium. B) Each of Seng and the company could buy a $500,000 level death benefit UL policy on Seng's life, with each being the beneficiary of the policy it/he owns. Seng could maximum-fund his policy and the company could minimum-fund its policy. C) Each of Seng and the company could buy a $500,000 UL policy on Seng's life with the level plus account value death benefit. Each would be the beneficiary of the policy owned by the other. Seng could maximum-fund his policy and the company could minimum-fund its policy. D) Seng could buy a $500,000 UL policy on his own life with the level plus account value death benefit. Seng would own the basic death benefit and the company would own the cash value and the portion of the death benefit equal to the account value. Seng would pay a premium equal to the policy
Chapter3: Business Income And Expenses
Section: Chapter Questions
Problem 11MCQ
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Transcribed Image Text:Energo Electronics, an incorporated business, has a highly paid electrical and
computer specialist, Seng, on the payroll whose services are essential to the success
of the business. The company is concerned that should Seng die or become disabled
the business would suffer serious financial setbacks. In order to partially protect its
interests, the company plans to purchase $500,000 worth of term insurance on
Seng's life. Earning over $300,000 a year Seng's primary concern is to shelter as
much of his income as possible from taxes. He has little personal need for life
insurance.
Suggest a solution using universal life insurance that would meet both Seng's and the
company's needs.
A) The company could buy a $500,000 UL policy on Seng's life with the level
plus account value death benefit. The company would own the basic death
benefit and Seng would own the cash value and the portion of the death
benefit equal to the account value. The company would pay a premium equal
to the policy NCPI and Seng would pay the balance of any planned premium.
B) Each of Seng and the company could buy a $500,000 level death benefit UL
policy on Seng's life, with each being the beneficiary of the policy it/he owns.
Seng could maximum-fund his policy and the company could minimum-fund
its policy.
C) Each of Seng and the company could buy a $500,000 UL policy on Seng's life
with the level plus account value death benefit. Each would be the
beneficiary of the policy owned by the other. Seng could maximum-fund his
policy and the company could minimum-fund its policy.
D) Seng could buy a $500,000 UL policy on his own life with the level plus
account value death benefit. Seng would own the basic death benefit and the
company would own the cash value and the portion of the death benefit
equal to the account value. Seng would pay a premium equal to the policy
NCPI and the company would pay the balance of any planned premium.
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