Practice Quiz

Health and Life Insurance

Category - Tax Issues

Start a Study Session Sign up for Question of the Day
The inside build-up of cash value in a life insurance policy is not considered to be taxable unless or until the policy is __________. This is true even if the cash value is taken out as a loan.
  1. Surrendered
  2. Lapsed
  3. Cancelled
  4. All of the above
Explanation
Answer: D - The inside build-up of cash value in a life insurance policy is not taxable, even if it is taken out as a loan, unless or until the policy has been cancelled, surrendered, or lapsed. In this case, the amount that is above the policy holder's basis will be taxable as income. The remainder of the cash is considered to be the policy holder's basis.
Was this helpful? Upvote!
Login to contribute your own answer or details
Start a Study Session Sign up for Question of the Day

Top questions

Related questions

Most popular on PracticeQuiz