Taxation of Life Insurance and Annuities - Premiums and Proceeds

If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually? A

$3,000

What type of annuity activity will cause immediate taxation of the interest earned?

Surrender for cash

What is the penalty for IRA distributions that are below the required minimum for the year?

50

What is the main purpose of the Seven-pay Test

It determines if the insurance policy is a MEC.

What method is used to determine the taxable portion of eac

The exclusion ratio

Which of the following statements regarding deferred compensation funds is INCORRECT?

They are usually qualified plans.

Which concept is associated with "exclusion ratio"?

Annuity payments

If an annuitant dies during the accumulation period, what benefit (if any) will be included in the annuitant's estate?

Cashv

Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE?

Withdrawals are not taxable.

The premiums paid by the employer in a business life insuran

tax deductible by the employer