Class 11, Life Insurance Flashcards
1
Q
What is the rule regarding life insurance proceeds?
A
Gross income does not include proceeds paid by reason of death of the insured. However when the proceeds are paid in installments, any interest will be taxable.
2
Q
Insured
A
Person covered; when that person dies, the company must pay
3
Q
Policy owner
A
Owns the property and can name the beneficiary
4
Q
Insurance company
A
Firm under obligationto pay when the insured dies
5
Q
Beneficiary
A
Person who receives the payment when the insured dies; there is no unit on the number of times you can change a beneficiary
6
Q
Policy variations in payment
A
A) lump sum→ endowment policy; paid for entire cost
B) installments → pay certain amount per year/month
7
Q
Death benefit payment options (x4)
A
①
