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(Solved by Expert Tutors) Jack, who is 36 years old, has been employed by XYZ Inc. for 12 years


and subscribed hissuperannuation fund on his employment starting date at XYZ. He has a superannuationaccount balance $200,000 with $30,000 of tax-free component. Jack?s current income is$190,000 and it is expected to be unchanged until his retirement. Jack would like his nondependentchildren to receive a lump-sum after-tax benefit $500,000 on his death. Becausehe has only $200,000 in his superannuation account, he should buy additional life cover tomeet his financial plan.Jack can buy the life cover either outside the superannuation or through the superannuation.As a financial advisor, which option would you recommend?
Justify your advice byproviding the pre-tax premium of each option, and in particular, report how/why youradvice will depend on whether the policy within superannuation will be purchased fromconcessional contribution or not.
(For simplicity, you can make the following assumptions: first, regarding the tax-payable ofdeath benefits, consider the maximum tax-payable in case Jack dies today (i.e., consider thetax-payable most conservatively); second, the premium of life cover is 5% of the suminsured. If you need any additional assumptions for your analysis, please clearly state them inyour report.)

 


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Apr 19, 2020

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