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 $280 per day.She will receive $270 per day from a $500,000 life insurance policy as an accelerated death benefit.In 2015,she was in the hospital for 10 days and received $2,700.How much of this amount is taxable?

Question

Quizplus · Accepted Answer

The accelerated death benefits from a life insurance policy are generally not taxable if the insured is certified as chronically ill and the benefits do not exceed the actual cost of care. Since Julia's daily hospital expenses are $280 and she received $270 per day, the benefits do not exceed her expenses, making the amount non-taxable.

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