Life Insurance Policy Provisions, Options, and Riders
How is the interest paid under the interest only settlement option treated for tax?
Answer and explanation
Answer: C. The exclusion covers the death benefit, not earnings on it, so interest the insurer credits after the insured's death is taxable to the beneficiary as it is received. Deferring the tax until the principal is taken is not how the option is treated.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, interest only option
More life insurance policy provisions, options, and riders questions
- What is fixed and what varies under the fixed-period settlement option?
- What is the function of a payor benefit rider attached to a juvenile life insurance policy?
- What is the practical difference for an owner between a revocable and an irrevocable beneficiary designation?
- What is the role of a tertiary beneficiary in the succession of beneficiaries?
- What may an insurer promise about the dividends on a participating policy?
- What need does a children's term rider chiefly meet?
621 New York questions like this one.
Every answer explained, the ones you miss come back on a spaced schedule, and a plan built from your exam date.