Author Question: All of the following statements about the income tax treatment of individually-purchased life ... (Read 71 times)

BrownTown3 · **on:** Jul 11, 2018

All of the following statements about the income tax treatment of individually-purchased life insurance are true EXCEPT

A) policyowner dividends are received tax-free.
B) the annual increase in cash value is not taxable while the policy remains in force.
C) premiums paid for individual life insurance are a tax deductible expense.
D) life insurance proceeds paid to a beneficiary in a lump-sum are received tax-free.

Question 2

Paul is shopping for a life insurance policy. An agent asked Paul if he would like to purchase a participating policy. What is a participating policy?

A) a policy which has a cash value
B) a policy which pays dividends
C) a policy which invests in common stock
D) a policy which provides for an increasing death benefit