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- May 16, 2012
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I need your suggestions/answers for the following question (zip excel spreadsheet attached):
1. Mr A paid life premium $348.25/year (25%) from year 0 to 8 (total=$2786) inclusive to help Mr C (a relative who can afford to pay 75% and paid from year 0 - 22) with his life insurance premium (total premium=$1393/year).
2. Any yearly dividends received were used to buy additional amounts of participating insurance called dividend additions (or Paid up additions = PUA) that are payable on the death of the life insured. The cash value of any dividend addition will not be less than the dividend used to purchase the dividend additions.
3. For a financial reason, Mr A at year 9, left all yearly dividends and yearly paid up additions in the fund to accumulate further dividends and PUA from year 9 to year 22, and asked another relative Mr B to continue the 25% premium payment.
4. Mr B helped A pay the premium $348.25/year from year 9 to year 22 inclusively (total=$4875.5). Any yearly dividends received were used to buy additional PUA similar to item 1 above. There was no contract or agreement made at year 9 as how to divide amount in future between them.
4. At end of year 22, the life policy made a settlement payment because Mr C passed away. The total payment was $35,913.33 (after taken out Mr C 75% portion). The breakdown of the settlement were Face Value = $25,000(payment conditional upon occurance of death); PUA = $10,455.55; Interim dividend = $14.92; interest = $442.86 (5 months from date of application to date of payment).
5. To be fair what amount should A get? What amount should B get?
6. Should the face value $25,000 separately calculated (if so how?) or should it be calculated as a lump sum (i.e. $35,913.33)?
7. Mr X suggested to use 8/14 of the settlement ($35913.33) for A and the balance for Mr B. Mr Y suggested A should get total contribution plus any bonuses from year 0 to 8 plus any accrued bonuses from year 9 to year 22. B get the remainder & divide the face value according to the proportion of amounts received. Which one is correct. What is your suggestion?
8. Please help. Your prompt answer/suggestion would be appreciated.
Yours sincerely,
Whyme_jj
1. Mr A paid life premium $348.25/year (25%) from year 0 to 8 (total=$2786) inclusive to help Mr C (a relative who can afford to pay 75% and paid from year 0 - 22) with his life insurance premium (total premium=$1393/year).
2. Any yearly dividends received were used to buy additional amounts of participating insurance called dividend additions (or Paid up additions = PUA) that are payable on the death of the life insured. The cash value of any dividend addition will not be less than the dividend used to purchase the dividend additions.
3. For a financial reason, Mr A at year 9, left all yearly dividends and yearly paid up additions in the fund to accumulate further dividends and PUA from year 9 to year 22, and asked another relative Mr B to continue the 25% premium payment.
4. Mr B helped A pay the premium $348.25/year from year 9 to year 22 inclusively (total=$4875.5). Any yearly dividends received were used to buy additional PUA similar to item 1 above. There was no contract or agreement made at year 9 as how to divide amount in future between them.
4. At end of year 22, the life policy made a settlement payment because Mr C passed away. The total payment was $35,913.33 (after taken out Mr C 75% portion). The breakdown of the settlement were Face Value = $25,000(payment conditional upon occurance of death); PUA = $10,455.55; Interim dividend = $14.92; interest = $442.86 (5 months from date of application to date of payment).
5. To be fair what amount should A get? What amount should B get?
6. Should the face value $25,000 separately calculated (if so how?) or should it be calculated as a lump sum (i.e. $35,913.33)?
7. Mr X suggested to use 8/14 of the settlement ($35913.33) for A and the balance for Mr B. Mr Y suggested A should get total contribution plus any bonuses from year 0 to 8 plus any accrued bonuses from year 9 to year 22. B get the remainder & divide the face value according to the proportion of amounts received. Which one is correct. What is your suggestion?
8. Please help. Your prompt answer/suggestion would be appreciated.
Yours sincerely,
Whyme_jj
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