Massachusetts law requires motorists to maintain liability

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Boudreau, a resident of Louisiana, carries the minimum required PAP liability limit of 10/25/10. While on vacation in Massachusetts, Boudreau strikes a pedestrian with his car, resulting in medical costs for the victim of $45,000. Massachusetts law requires motorists to maintain liability limits of 20/40/15. Which of the following statements concerning this situation is correct?

Boudreau's insurance company will only pay $10,000 towards the victim's medical costs.

Boudreau is subject to arrest or citation for failing to maintain proper insurance under Massachusetts law.

Boudreau may be personally liable for $25,000 of the medical expense costs.

Boudreau's insurance company will pay $40,000 of the medial expense costs.

Scott purchased a life insurance policy to insure that his kids were taken care of in the event of his untimely death. Since they are now grown, he feels he no longer needs the life insurance. He would like to exchange it for an annuity that can provide him additional income for his golden years. Which of the following is correct?

He can make the exchange, but it will be taxable to the extent of the cash value

He can make the exchange, but it will be taxable to the extent of the cash value less the additional money he puts into the annuity.

He can make the exchange, which will not be taxable.

He can make the exchange, which will not be taxable, but his basis will not reflect any of the investment into the life insurance policy.

Reference no: EM132007018

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