Practice Quiz

Health and Life Insurance

Category - Tax Issues

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The interest that is repaid by a life insurance policy holder who has taken out a loan is considered to be consumer interest and is therefore __________.
  1. Fully deductible
  2. Partially deductible
  3. Non-reportable
  4. Not deductible
Explanation
Answer: D - The interest that is repaid by a life insurance policy holder who has taken out a loan is considered to be consumer interest and is therefore not tax deductible. This is so even if the policy holder itemizes on his or her taxes. Unlike mortgage interest payments, the payment of consumer interest is not tax deductible.
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