Question

One of your customers purchased a variable life insurance contract through your firm. after 14 years, he had deposited $15,000 in premiums, and his death benefit had grown to $80,000. shortly after taking out a loan against cash value of $10,000, he was killed in an automobile accident. what will be the consequences of this situation to the death benefit?

Answer 1

Given that one of your customers purchased a variable life insurance contract through your firm. after 14 years, he had deposited $15,000 in premiums, and his death benefit had grown to $80,000. shortly after taking out a loan against cash value of $10,000, he was killed in an automobile accident.

The consequences of this situation to the death benefit is that:
His beneficiary will receive the death benefit minus the value of the loan.
His beneficiary need not pay taxes on the death benefit.