Rebecca Is the Beneficiary of a $500,000 Insurance Policy on Her

question 23

Multiple Choice

Rebecca is the beneficiary of a $500,000 insurance policy on her husband's life.She elects to receive $52,000 per year for 10 years rather than receive the entire amount in a lump sum.Of the amount received each year

• A)$2,000 is taxable income.
• B)$50,000 is taxable income.
• C)$52,000 is taxable income.
• D)$5,000 per year is tax free as a death benefit.

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Definitions:

Long-Term Financial Risk

The possibility of experiencing financial losses or failures that arise over an extended period, often due to changes in market conditions, interest rates, or other economic factors.

Short-Term Financial Risk

The risk associated with the need to meet financial obligations in the near term, often within one year.

Canadian Short-Term Interest Rates

The interest rates applied to short-term financial instruments in Canada, typically with maturities of less than one year.

Bank Of Canada

The central bank of Canada, responsible for the country's monetary policy, issuing currency, and acting as the government's banker.