Life Insurance Policy Provisions, Options, and Riders
How is the interest credited under the accumulation at interest dividend option treated for tax?
Answer and explanation
Answer: D. Dividends are a return of premium and are not income, but interest credited on them is, and it is taxable as it is credited whether or not the owner takes it. Deferral to withdrawal and a premium-based threshold are not how it works.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, accumulation at interest and tax
More life insurance policy provisions, options, and riders questions
- How does a cost of living (COLA) rider adjust policy coverage over time?
- How does a joint and survivor life income differ from a joint life income?
- How does a long-term care (LTC) rider attached to a life policy fund care expenses?
- How does a partial withdrawal differ from a policy loan on a universal life policy?
- How does a survivorship clause in a common disaster provision operate?
- How does an automatic premium loan come to apply to a policy?
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