The Annual Increase in the Cash Surrender Value of a Life

question 87

Multiple Choice

The annual increase in the cash surrender value of a life insurance policy:

• A)Is taxed when the individual dies and the heirs collect the insurance proceeds.
• B)Must be included in gross income each year under the original issue discount rules.
• C)Reduces the deduction for life insurance expense.
• D)Is not included in gross income each year because of the substantial restrictions on gaining access to the policy's value.
• E)None of the above.

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Definitions:

Digestive Tract

The series of hollow organs joined in a long, twisting tube from the mouth to the anus, where food is broken down, nutrients are absorbed, and waste is expelled.

Adipose Tissue

A type of body tissue containing stored fat, serving as an energy reserve, padding and insulation for the body.

Greater Omentum

The greater omentum is a large apron-like fold of visceral peritoneum that hangs down from the stomach, playing a role in fat deposition and immune response.

Visceral Peritoneum

Layer of peritoneum covering the abdominal organs.