American College Exam HS330 Topic 4 Question 109 Discussion

Actual exam question for American College's HS330 exam

Question #: 109
Topic #: 4

On January 1, 2004 a father gave his daughter a $200,000 straight (ordinary) life insurance policy on his life. Premiums are paid annually. The pertinent facts about the policy are:

Date of issue: July 1, 1992

Premium paid on July 1, 2003 $3200

Terminal reserve on July 1, 2003 20,000

Terminal reserve on July 1, 2004 24,000

What is the value of the policy for federal gift tax purposes?

A$ 21,600

B$23,200

C$23,600

D$200,000

Show Suggested Answer

Suggested Answer: B

by Alba at Mar 20, 2025, 07:32 AM

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Elfriede

3 days ago

I agree with Marguerita, the terminal reserve increased by $4,000 from 2003 to 2004.

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Marguerita

4 days ago

I think the answer is C) $17,700.

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Hmm, I think it's B) $17,400. The policy was issued in 1992 and the premium paid in 2003 was $3,200. The terminal reserve increased from $20,000 to $24,000 between 2003 and 2004, so the value of the policy should be the difference, which is $17,400.

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American College Exam HS330 Topic 4 Question 109 Discussion

Contribute your Thoughts:

Elfriede

Marguerita

Francine