Albert Had a Terminal Illness Which Required Almost Constant Nursing

question 30

Multiple Choice

Albert had a terminal illness which required almost constant nursing care for the remaining two years of his estimated life, according to his doctor. Albert had a life insurance policy with a face amount of $100,000. Albert had paid $25,000 of premiums on the policy. The insurance company has offered to pay him $80,000 to cancel the policy, although its cash surrender value was only $55,000. Albert accepted the $80,000. Albert used $15,000 to pay his medical expenses. Albert made a miraculous recovery and lived another 20 years. As a result of cashing in the policy:

• A) Albert must recognize $55,000 of gross income, but he has $15,000 of deductible medical expenses.
• B) Albert must recognize $65,000 ($80,000 - $15,000) of gross income.
• C) Albert must recognize $40,000 ($80,000 - $25,000 - $15,000) of gross income.
• D) Albert is not required to recognize any gross income because of his terminal illness.
• E) None of the above.

Understand how different levels of arousal affect performance in various activities.

Learn the influence of cognitive appraisal on stress and emotions.

Identify physiological responses to stress and their impact on health.

Understand the role of defense mechanisms in managing unpleasant emotions.

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Definitions:

Mutual Assent

An agreement between two or more parties manifested by an offer and acceptance, which forms the basis of a contract.

Legality

Conformity with the law or adherence to lawful requirements.

Competent Parties

Individuals or entities that have the legal capacity to enter into a contract, including being of legal age and sound mind.

Consideration

A fundamental concept in contract law that involves something of value exchanged between parties entering into a contract.