The client's net worth is $7,500,000. It consists of stocks and bonds worth $6,000,000 and a $1,500,000 home. She is single and you are recommending that she buy life insurance to cover the estimated estate taxes due at her death.
Assuming a 40% tax rate and $5.25 million exemption from the death tax, how much life insurance should she buy?
- $2,250,000
- $900,000
- $7.5 million
- $875,000
- $1,750,000