Daniella has a universal life (UL) insurance policy with a face value of $1,000,000. The...
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Accounting
Daniella has a universal life (UL) insurance policy with a face value of $1,000,000. The net cost of pure insurance (NCPI) is $6,000 and Daniella pays annual premiums of $20,000. As a business owner and entrepreneur, Daniella owns a successful restaurant and would like to open another location to expand her business. In order to do so, she applies for a loan of $250,000 at her local bank. Subsequently, the bank approves Daniellas loan, contingent upon the collateral assignment of her policy. What amount of her annual insurance premium can Daniella deduct as a business expense?
a) $1,500
b) $5,000
c) $6,000
d) $20,000
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