Julia Suffered a Severe Stroke and Has Been Admitted to a Private

question 1752

Multiple Choice

Julia suffered a severe stroke and has been admitted to a private hospital where she is expected to remain for the rest of her life. She is certified by a licensed health care practitioner as being a "chronically ill individual." Her hospital expenses amount to $350 per day. She will receive $340 per day from a $500,000 life insurance policy as an accelerated death benefit. In 2018, she was in the hospital for 10 days and received $3,400. How much of this amount is taxable?

• A) $500
• B) $3,400
• C) $0
• D) $100

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Definitions:

Detrimentally Relied

A legal principle where a party suffers a loss due to reliance on a promise or statement of another.

Donee Beneficiary

A third party who benefits from a contract between two other parties, especially in the context of gifts or donations.

Incidental Beneficiary

A third party who benefits from a contract between two other parties, but has no rights to enforce the terms of the contract or claim damages for its breach.

Corporate Beneficiary

An entity that is designated to receive benefits or proceeds from a legal instrument, such as a trust, will, or insurance policy, in a corporate context.