Federal Tax Considerations for Life Insurance and Annuities

Only the premiums paid will be included in the estate

An insured had paid only part of her total number of IRA premiums before she died. What effect will this have on the insured's estate?

A Modified Endowment Contract

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is

Generally not taxed as income

Life insurance death proceeds are

Withdrawn amounts are taxed on a last in, first out basis

Which of the following describes the taxation of an annuity when money is withdrawn during

Dividends are not taxable

Which of the following is true regarding taxation of dividends in participating policies?

Withdrawals are not taxable

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

50% tax on the amount not distributed as required

An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?