Question 1
Prepare for George and Grace the following:
(a) Cash Flow Statement for the period 1 Jan 2013 to 31 December 2013.
(b) Net Worth Statement as at 31 December 2013.
Question 2
(a) Using the information given in the case study above, determine George's insurance requirement as at 31st December 2013 using the CPF Insurance Estimator
Assume in your study that under Dependant's Needs:
i. Household expenses (including all Parental Support) will be reduced by 30% in the event of George's death. Round up the result to the nearest whole number.
This amount is to be provided until Jean is 25 years old.
ii. Expected returns and Inflation are 2% and 3.5% respectively
In your answer, insert a detailed printout of your results - all the headings and their items must be shown (a sample is shown below)
(b) Insurance is an important risk management tool for personal financial planning, and insurers need to be able to make a proper and unbiased evaluation of the risk they underwrite. To do this, insurers depend on the principle of Uberrimae Fidei. Please read the two references given below:
1. Your Guide to Life Insurance found with The Life Insurance Association (LIA)
2. Section 25 (5) of the Life Insurance Act (Chap 142)
"No Singapore insurer shall use, in the course of carrying on insurance business in Singapore, a form of proposal which does not have prominently displayed therein a warning that if a proposer does not fully and faithfully give the facts as he knows them or ought to know them, he may receive nothing from the policy."
i. Describe the Needs-Based Sales Advisory Process.
ii. Indicate which policies will pay out, and how much will be paid, if Grace were to
a) Contract a Major Illness,
b) (1 year later) pass away
Question 3
(a) While George has read a lot about the tax incentives of making SRS contributions, he is concerned that he would not have the freedom to use his funds in the SRS account in whichever way he wants.
i. Advise George about the situations that the SRS can be withdrawn without penalty, commenting also on how much tax must be paid on the amount withdrawn.
ii. What Life Insurance products can George purchase using his SRS funds? Are there any restrictions for these products?
(b) What is the Criteria for, and total amount of Qualifying Child Relief Grace can claim for the Year of Assessment 2014? (Show working to justify your answer)
(c) When you look at the combined Cash Flow Statement of George and Grace, and assuming that the couple have both been at their jobs for at least the recent 5 years, offer the most likely explanation why they are both not paying any tax for YOA 2013.
Question 4
(a) Discuss with George how he will be able to give each of his assets to his family in the event he passes on.
(b) In the event that George passes on without making any formal arrangement (as discussed in (a) above) to pass on his estate, describe how his estate will then be distributed. Explain with relevant references.